Correlation Between Lucid and Aston Martin

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

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

Diversification Opportunities for Lucid and Aston Martin

0.1

Correlation Coefficient

Lucid  Aston Martin

Average diversification

The 3 months correlation between Lucid and Aston is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Lucid 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 Lucid Group are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Lucid i.e., Lucid and Aston Martin go up and down completely randomly.

Pair Corralation between Lucid and Aston Martin

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Aston Martin. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 1.05 times less risky than Aston Martin. The stock trades about -0.13 of its potential returns per unit of risk. The Aston Martin Lagonda is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Aston Martin Lagonda on December 2, 2024 and sell it today you would lose (15.00) from holding Aston Martin Lagonda or give up 11.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Lucid Group  vs.  Aston Martin Lagonda

Lucid Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 3 (%) 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.

Aston Martin Lagonda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lucid and Aston Martin

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

The idea behind Lucid Group and Aston Martin Lagonda 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.