Correlation Between Lucid and PFIZER

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

By analyzing existing cross correlation between Lucid Group and PFIZER INC 43, you can compare the effects of market volatilities on Lucid and PFIZER 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 PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and PFIZER.

Diversification Opportunities for Lucid and PFIZER

0.65

Correlation Coefficient

Lucid  PFIZER

Poor diversification

The 3 months correlation between Lucid and PFIZER is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and PFIZER INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 43 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 43 has no effect on the direction of Lucid i.e., Lucid and PFIZER go up and down completely randomly.

Pair Corralation between Lucid and PFIZER

Given the investment horizon of 90 days Lucid Group is expected to generate 7.35 times more return on investment than PFIZER. However, Lucid is 7.35 times more volatile than PFIZER INC 43. It trades about 0.35 of its potential returns per unit of risk. PFIZER INC 43 is currently generating about -0.16 per unit of risk. If you would invest  217.00  in Lucid Group on September 28, 2024 and sell it today you would earn a total of  96.00  from holding Lucid Group or generate 44.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.95%
Values	Daily Returns

Lucid Group  vs.  PFIZER INC 43

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.

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PFIZER INC 43 investors.

Pair Trading with Lucid and PFIZER

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

The idea behind Lucid Group and PFIZER INC 43 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.