Correlation Between Lucid and PHINIA

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

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

Diversification Opportunities for Lucid and PHINIA

-0.5

Correlation Coefficient

Lucid  PHINIA

Very good diversification

The 3 months correlation between Lucid and PHINIA is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Lucid i.e., Lucid and PHINIA go up and down completely randomly.

Pair Corralation between Lucid and PHINIA

Given the investment horizon of 90 days Lucid Group is expected to generate 2.05 times more return on investment than PHINIA. However, Lucid is 2.05 times more volatile than PHINIA Inc. It trades about 0.1 of its potential returns per unit of risk. PHINIA Inc is currently generating about 0.12 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  58.00  from holding Lucid Group or generate 23.29% return on investment over 90 days.

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

Lucid Group  vs.  PHINIA Inc

Lucid Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 7 (%) 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.

PHINIA Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, PHINIA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucid and PHINIA

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

The idea behind Lucid Group and PHINIA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.