Correlation Between BorgWarner and Lucid

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

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

Diversification Opportunities for BorgWarner and Lucid

-0.09

Correlation Coefficient

BorgWarner  Lucid

Good diversification

The 3 months correlation between BorgWarner and Lucid is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and BorgWarner 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 BorgWarner 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 BorgWarner i.e., BorgWarner and Lucid go up and down completely randomly.

Pair Corralation between BorgWarner and Lucid

Considering the 90-day investment horizon BorgWarner is expected to generate 0.38 times more return on investment than Lucid. However, BorgWarner is 2.66 times less risky than Lucid. It trades about -0.01 of its potential returns per unit of risk. Lucid Group is currently generating about -0.01 per unit of risk. If you would invest  3,792  in BorgWarner on October 7, 2024 and sell it today you would lose (640.00) from holding BorgWarner or give up 16.88% of portfolio value over 90 days.

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

BorgWarner  vs.  Lucid Group

BorgWarner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lucid Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BorgWarner and Lucid

The main advantage of trading using opposite BorgWarner and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner 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 BorgWarner 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.