Correlation Between Brunswick and Lucid

Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brunswick and Lucid Group, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Lucid.

Diversification Opportunities for Brunswick and Lucid

-0.7

Correlation Coefficient

Brunswick  Lucid

Excellent diversification

The 3 months correlation between Brunswick and Lucid is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Lucid go up and down completely randomly.

Pair Corralation between Brunswick and Lucid

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.44 times more return on investment than Lucid. However, Brunswick is 2.27 times less risky than Lucid. It trades about -0.01 of its potential returns per unit of risk. Lucid Group is currently generating about -0.03 per unit of risk. If you would invest  8,100  in Brunswick on October 22, 2024 and sell it today you would lose (1,355) from holding Brunswick or give up 16.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Brunswick  vs.  Lucid Group

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lucid Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Lucid exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Lucid

The main advantage of trading using opposite Brunswick and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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 Brunswick 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.