Correlation Between Lucid and Ferrari NV

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

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

Diversification Opportunities for Lucid and Ferrari NV

0.06

Correlation Coefficient

Lucid  Ferrari NV

Significant diversification

The 3 months correlation between Lucid and Ferrari is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV 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 Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of Lucid i.e., Lucid and Ferrari NV go up and down completely randomly.

Pair Corralation between Lucid and Ferrari NV

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Ferrari NV. In addition to that, Lucid is 2.27 times more volatile than Ferrari NV. It trades about -0.07 of its total potential returns per unit of risk. Ferrari NV is currently generating about 0.01 per unit of volatility. If you would invest  42,677  in Ferrari NV on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Ferrari NV or generate 0.01% return on investment over 90 days.

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

Lucid Group  vs.  Ferrari NV

Lucid Group

Risk-Adjusted Performance

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

Ferrari NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferrari NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ferrari NV is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lucid and Ferrari NV

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

The idea behind Lucid Group and Ferrari NV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.