Correlation Between Ralph Lauren and Lucid

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

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

Diversification Opportunities for Ralph Lauren and Lucid

0.22

Correlation Coefficient

Ralph Lauren  Lucid

Modest diversification

The 3 months correlation between Ralph and Lucid is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Ralph Lauren 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 Ralph Lauren Corp 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 Ralph Lauren i.e., Ralph Lauren and Lucid go up and down completely randomly.

Pair Corralation between Ralph Lauren and Lucid

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.48 times more return on investment than Lucid. However, Ralph Lauren Corp is 2.1 times less risky than Lucid. It trades about 0.07 of its potential returns per unit of risk. Lucid Group is currently generating about 0.01 per unit of risk. If you would invest  20,231  in Ralph Lauren Corp on December 27, 2024 and sell it today you would earn a total of  2,942  from holding Ralph Lauren Corp or generate 14.54% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  Lucid Group

Ralph Lauren Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Lucid Group

Risk-Adjusted Performance

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

Pair Trading with Ralph Lauren and Lucid

The main advantage of trading using opposite Ralph Lauren and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren 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 Ralph Lauren Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.