Correlation Between Shift4 Payments and Lucas GC

Can any of the company-specific risk be diversified away by investing in both Shift4 Payments and Lucas GC 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 Shift4 Payments and Lucas GC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shift4 Payments and Lucas GC Limited, you can compare the effects of market volatilities on Shift4 Payments and Lucas GC 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 Shift4 Payments with a short position of Lucas GC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Lucas GC.

Diversification Opportunities for Shift4 Payments and Lucas GC

0.18

Correlation Coefficient

Shift4 Payments  Lucas GC

Average diversification

The 3 months correlation between Shift4 and Lucas is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Lucas GC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucas GC Limited and Shift4 Payments 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 Shift4 Payments are associated (or correlated) with Lucas GC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucas GC Limited has no effect on the direction of Shift4 Payments i.e., Shift4 Payments and Lucas GC go up and down completely randomly.

Pair Corralation between Shift4 Payments and Lucas GC

Given the investment horizon of 90 days Shift4 Payments is expected to under-perform the Lucas GC. But the stock apears to be less risky and, when comparing its historical volatility, Shift4 Payments is 2.06 times less risky than Lucas GC. The stock trades about -0.08 of its potential returns per unit of risk. The Lucas GC Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Lucas GC Limited on December 28, 2024 and sell it today you would lose (16.00) from holding Lucas GC Limited or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Shift4 Payments  vs.  Lucas GC Limited

Shift4 Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Lucas GC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucas GC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Shift4 Payments and Lucas GC

The main advantage of trading using opposite Shift4 Payments and Lucas GC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments position performs unexpectedly, Lucas GC 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 Lucas GC will offset losses from the drop in Lucas GC's long position.

The idea behind Shift4 Payments and Lucas GC Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.