Correlation Between Lucid and Superior Industries
Can any of the company-specific risk be diversified away by investing in both Lucid and Superior Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lucid and Superior Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Superior Industries International, you can compare the effects of market volatilities on Lucid and Superior Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lucid with a short position of Superior Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Superior Industries.
Diversification Opportunities for Lucid and Superior Industries
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lucid and Superior is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries and Lucid is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lucid Group are associated (or correlated) with Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Lucid i.e., Lucid and Superior Industries go up and down completely randomly.
Pair Corralation between Lucid and Superior Industries
Given the investment horizon of 90 days Lucid Group is expected to generate 1.22 times more return on investment than Superior Industries. However, Lucid is 1.22 times more volatile than Superior Industries International. It trades about -0.02 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.2 per unit of risk. If you would invest 275.00 in Lucid Group on November 27, 2024 and sell it today you would lose (14.00) from holding Lucid Group or give up 5.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lucid Group vs. Superior Industries Internatio
Performance |
Timeline |
Lucid Group |
Superior Industries |
Lucid and Superior Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lucid and Superior Industries
The main advantage of trading using opposite Lucid and Superior Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Superior Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Superior Industries will offset losses from the drop in Superior Industries' long position.The idea behind Lucid Group and Superior Industries International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Superior Industries vs. Monro Muffler Brake | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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