Correlation Between Lucid and EMERA

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

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

Diversification Opportunities for Lucid and EMERA

-0.47

Correlation Coefficient

Lucid  EMERA

Very good diversification

The 3 months correlation between Lucid and EMERA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and EMERA FIN LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERA FIN LP 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 EMERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERA FIN LP has no effect on the direction of Lucid i.e., Lucid and EMERA go up and down completely randomly.

Pair Corralation between Lucid and EMERA

Given the investment horizon of 90 days Lucid Group is expected to under-perform the EMERA. In addition to that, Lucid is 5.72 times more volatile than EMERA FIN LP. It trades about -0.06 of its total potential returns per unit of risk. EMERA FIN LP is currently generating about -0.06 per unit of volatility. If you would invest  8,340  in EMERA FIN LP on December 22, 2024 and sell it today you would lose (237.00) from holding EMERA FIN LP or give up 2.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Lucid Group  vs.  EMERA FIN LP

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 unfluctuating 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.

EMERA FIN LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMERA FIN LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EMERA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lucid and EMERA

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

The idea behind Lucid Group and EMERA FIN LP 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.