Correlation Between Lucid and ECD Automotive

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

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

Diversification Opportunities for Lucid and ECD Automotive

0.0

Correlation Coefficient

Lucid  ECD Automotive

Pay attention - limited upside

The 3 months correlation between Lucid and ECD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Lucid i.e., Lucid and ECD Automotive go up and down completely randomly.

Pair Corralation between Lucid and ECD Automotive

Given the investment horizon of 90 days Lucid Group is expected to generate 1.28 times more return on investment than ECD Automotive. However, Lucid is 1.28 times more volatile than ECD Automotive Design. It trades about 0.07 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.03 per unit of risk. If you would invest  249.00  in Lucid Group on October 23, 2024 and sell it today you would earn a total of  37.00  from holding Lucid Group or generate 14.86% return on investment over 90 days.

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

Lucid Group  vs.  ECD Automotive Design

Lucid Group

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 5 (%) 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.

ECD Automotive Design

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lucid and ECD Automotive

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

The idea behind Lucid Group and ECD Automotive Design 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.