Correlation Between Wabash National and Lucid
Can any of the company-specific risk be diversified away by investing in both Wabash National 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 Wabash National and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Lucid Group, you can compare the effects of market volatilities on Wabash National 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 Wabash National with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Lucid.
Diversification Opportunities for Wabash National and Lucid
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wabash and Lucid is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Wabash National 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 Wabash National 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 Wabash National i.e., Wabash National and Lucid go up and down completely randomly.
Pair Corralation between Wabash National and Lucid
Considering the 90-day investment horizon Wabash National is expected to generate 4.4 times less return on investment than Lucid. But when comparing it to its historical volatility, Wabash National is 2.33 times less risky than Lucid. It trades about 0.02 of its potential returns per unit of risk. Lucid Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
Wabash National vs. Lucid Group
Performance |
| Timeline |
| Wabash National |
| Lucid Group |
Wabash National and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Lucid
The main advantage of trading using opposite Wabash National and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National 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.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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