Correlation Between Lucid and Wabash National
Can any of the company-specific risk be diversified away by investing in both Lucid and Wabash National 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 Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Wabash National, you can compare the effects of market volatilities on Lucid and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Wabash National.
Diversification Opportunities for Lucid and Wabash National
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lucid and Wabash is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Lucid i.e., Lucid and Wabash National go up and down completely randomly.
Pair Corralation between Lucid and Wabash National
Given the investment horizon of 90 days Lucid Group is expected to generate 2.33 times more return on investment than Wabash National. However, Lucid is 2.33 times more volatile than Wabash National. It trades about 0.04 of its potential returns per unit of risk. Wabash National is currently generating about 0.02 per unit of risk. If you would invest 234.00 in Lucid Group on September 12, 2024 and sell it today you would earn a total of 5.50 from holding Lucid Group or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Wabash National
Performance |
| Timeline |
| Lucid Group |
| Wabash National |
Lucid and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Wabash National
The main advantage of trading using opposite Lucid and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.The idea behind Lucid Group and Wabash National 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.| Wabash National vs. Manitowoc | Wabash National vs. Alamo Group | Wabash National vs. AGCO Corporation | Wabash National vs. Deere Company |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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