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 3, 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

0.32

Correlation Coefficient

Lucid  PFIZER

Weak diversification

The 3 months correlation between Lucid and PFIZER is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and PFIZER INC 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 3 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 3 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 11.58 times more return on investment than PFIZER. However, Lucid is 11.58 times more volatile than PFIZER INC 3. It trades about 0.0 of its potential returns per unit of risk. PFIZER INC 3 is currently generating about 0.03 per unit of risk. If you would invest  407.00  in Lucid Group on September 24, 2024 and sell it today you would lose (105.00) from holding Lucid Group or give up 25.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.31%
Values	Daily Returns

Lucid Group  vs.  PFIZER INC 3

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 latest unfluctuating performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

PFIZER INC 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER 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 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 3 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.