Correlation Between Lucid and Safety Shot

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

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

Diversification Opportunities for Lucid and Safety Shot

0.68

Correlation Coefficient

Lucid  Safety Shot

Poor diversification

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

Pair Corralation between Lucid and Safety Shot

Given the investment horizon of 90 days Lucid Group is expected to generate 1.08 times more return on investment than Safety Shot. However, Lucid is 1.08 times more volatile than Safety Shot. It trades about 0.36 of its potential returns per unit of risk. Safety Shot is currently generating about -0.15 per unit of risk. If you would invest  206.00  in Lucid Group on September 22, 2024 and sell it today you would earn a total of  96.00  from holding Lucid Group or generate 46.6% return on investment over 90 days.

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

Lucid Group  vs.  Safety Shot

Lucid Group

Risk-Adjusted Performance

0 of 100

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 rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lucid and Safety Shot

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

The idea behind Lucid Group and Safety Shot 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.