Correlation Between Visteon Corp and Lucid
Can any of the company-specific risk be diversified away by investing in both Visteon Corp 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 Visteon Corp and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visteon Corp and Lucid Group, you can compare the effects of market volatilities on Visteon Corp 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 Visteon Corp with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and Lucid.
Diversification Opportunities for Visteon Corp and Lucid
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visteon and Lucid is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Visteon Corp 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 Visteon Corp 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 Visteon Corp i.e., Visteon Corp and Lucid go up and down completely randomly.
Pair Corralation between Visteon Corp and Lucid
Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 0.44 times more return on investment than Lucid. However, Visteon Corp is 2.27 times less risky than Lucid. It trades about -0.1 of its potential returns per unit of risk. Lucid Group is currently generating about -0.16 per unit of risk. If you would invest 9,583 in Visteon Corp on August 27, 2024 and sell it today you would lose (382.00) from holding Visteon Corp or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visteon Corp vs. Lucid Group
Performance |
| Timeline |
| Visteon Corp |
| Lucid Group |
Visteon Corp and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visteon Corp and Lucid
The main advantage of trading using opposite Visteon Corp and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp 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.The idea behind Visteon Corp and Lucid Group 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.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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