Correlation Between Dave Busters and Lucid

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

By analyzing existing cross correlation between Dave Busters Entertainment and Lucid Group, you can compare the effects of market volatilities on Dave Busters and Lucid 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 Dave Busters with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Lucid.

Diversification Opportunities for Dave Busters and Lucid

-0.55

Correlation Coefficient

Dave Busters  Lucid

Excellent diversification

The 3 months correlation between Dave and Lucid is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Dave Busters i.e., Dave Busters and Lucid go up and down completely randomly.

Pair Corralation between Dave Busters and Lucid

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Lucid. In addition to that, Dave Busters is 1.2 times more volatile than Lucid Group. It trades about -0.14 of its total potential returns per unit of risk. Lucid Group is currently generating about 0.34 per unit of volatility. If you would invest  217.00  in Lucid Group on September 24, 2024 and sell it today you would earn a total of  93.00  from holding Lucid Group or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  Lucid Group

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Dave Busters and Lucid

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

The idea behind Dave Busters Entertainment and Lucid Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.