Correlation Between Rivian Automotive and Lucid

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

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

Diversification Opportunities for Rivian Automotive and Lucid

0.71

Correlation Coefficient

Rivian Automotive  Lucid

Poor diversification

The 3 months correlation between Rivian and Lucid is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive i.e., Rivian Automotive and Lucid go up and down completely randomly.

Pair Corralation between Rivian Automotive and Lucid

Given the investment horizon of 90 days Rivian Automotive is expected to generate 53.62 times less return on investment than Lucid. In addition to that, Rivian Automotive is 1.01 times more volatile than Lucid Group. It trades about 0.0 of its total potential returns per unit of risk. Lucid Group is currently generating about 0.09 per unit of volatility. If you would invest  218.00  in Lucid Group on November 28, 2024 and sell it today you would earn a total of  43.00  from holding Lucid Group or generate 19.72% return on investment over 90 days.

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

Rivian Automotive  vs.  Lucid Group

Rivian Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rivian Automotive is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lucid Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Lucid exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rivian Automotive and Lucid

The main advantage of trading using opposite Rivian Automotive and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive 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 Rivian Automotive 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.