Correlation Between Grab Holdings and LYFT

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

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

Diversification Opportunities for Grab Holdings and LYFT

0.68

Correlation Coefficient

Grab Holdings  LYFT

Poor diversification

The 3 months correlation between Grab and LYFT is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings and LYFT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYFT Inc and Grab Holdings 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 Grab Holdings are associated (or correlated) with LYFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYFT Inc has no effect on the direction of Grab Holdings i.e., Grab Holdings and LYFT go up and down completely randomly.

Pair Corralation between Grab Holdings and LYFT

Given the investment horizon of 90 days Grab Holdings is expected to generate 1.09 times more return on investment than LYFT. However, Grab Holdings is 1.09 times more volatile than LYFT Inc. It trades about -0.03 of its potential returns per unit of risk. LYFT Inc is currently generating about -0.15 per unit of risk. If you would invest  500.00  in Grab Holdings on November 28, 2024 and sell it today you would lose (44.00) from holding Grab Holdings or give up 8.8% of portfolio value over 90 days.

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

Grab Holdings  vs.  LYFT Inc

Grab Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grab Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grab Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LYFT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days LYFT Inc 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Grab Holdings and LYFT

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

The idea behind Grab Holdings and LYFT Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.