Correlation Between Nio and Lucid
Can any of the company-specific risk be diversified away by investing in both Nio and Lucid 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 Nio and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Lucid Group, you can compare the effects of market volatilities on Nio and Lucid 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 Nio with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Lucid.
Diversification Opportunities for Nio and Lucid
Significant diversification
The 3 months correlation between Nio and Lucid is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Nio 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 Nio Class A are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Nio i.e., Nio and Lucid go up and down completely randomly.
Pair Corralation between Nio and Lucid
Considering the 90-day investment horizon Nio Class A is expected to generate 0.83 times more return on investment than Lucid. However, Nio Class A is 1.21 times less risky than Lucid. It trades about -0.03 of its potential returns per unit of risk. Lucid Group is currently generating about -0.04 per unit of risk. If you would invest 1,313 in Nio Class A on August 23, 2024 and sell it today you would lose (843.00) from holding Nio Class A or give up 64.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nio Class A vs. Lucid Group
Performance |
| Timeline |
| Nio Class A |
| Lucid Group |
Nio and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Lucid
The main advantage of trading using opposite Nio and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid's long position.| Nio vs. Lucid Group | Nio vs. Rivian Automotive | Nio vs. Polestar Automotive Holding | Nio vs. Mullen Automotive |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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