Correlation Between Lucid and Wabash National

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

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

Diversification Opportunities for Lucid and Wabash National

0.01

Correlation Coefficient

Lucid  Wabash National

Significant diversification

The 3 months correlation between Lucid and Wabash is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Lucid i.e., Lucid and Wabash National go up and down completely randomly.

Pair Corralation between Lucid and Wabash National

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Wabash National. In addition to that, Lucid is 2.16 times more volatile than Wabash National. It trades about -0.03 of its total potential returns per unit of risk. Wabash National is currently generating about 0.0 per unit of volatility. If you would invest  2,248  in Wabash National on September 5, 2024 and sell it today you would lose (283.00) from holding Wabash National or give up 12.59% of portfolio value over 90 days.

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

Lucid Group  vs.  Wabash National

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

Wabash National

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wabash National are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Wabash National 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 Wabash National

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

The idea behind Lucid Group and Wabash National 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.