Correlation Between GreenPower and Lucid

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

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

Diversification Opportunities for GreenPower and Lucid

0.57

Correlation Coefficient

GreenPower  Lucid

Very weak diversification

The 3 months correlation between GreenPower and Lucid is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and GreenPower 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 GreenPower Motor 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 GreenPower i.e., GreenPower and Lucid go up and down completely randomly.

Pair Corralation between GreenPower and Lucid

Allowing for the 90-day total investment horizon GreenPower Motor is expected to generate 1.96 times more return on investment than Lucid. However, GreenPower is 1.96 times more volatile than Lucid Group. It trades about 0.06 of its potential returns per unit of risk. Lucid Group is currently generating about -0.2 per unit of risk. If you would invest  87.00  in GreenPower Motor on September 4, 2024 and sell it today you would earn a total of  10.00  from holding GreenPower Motor or generate 11.49% return on investment over 90 days.

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

GreenPower Motor  vs.  Lucid Group

GreenPower Motor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenPower Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, GreenPower reported solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GreenPower and Lucid

The main advantage of trading using opposite GreenPower and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower 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 GreenPower Motor 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 Transaction History module to view history of all your transactions and understand their impact on performance.