Correlation Between Luminar Technologies and Ford

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

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

Diversification Opportunities for Luminar Technologies and Ford

0.52

Correlation Coefficient

Luminar Technologies  Ford

Very weak diversification

The 3 months correlation between Luminar and Ford is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Luminar Technologies 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 Luminar Technologies are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Luminar Technologies i.e., Luminar Technologies and Ford go up and down completely randomly.

Pair Corralation between Luminar Technologies and Ford

Given the investment horizon of 90 days Luminar Technologies is expected to under-perform the Ford. In addition to that, Luminar Technologies is 2.75 times more volatile than Ford Motor. It trades about -0.11 of its total potential returns per unit of risk. Ford Motor is currently generating about -0.06 per unit of volatility. If you would invest  1,250  in Ford Motor on September 30, 2024 and sell it today you would lose (247.00) from holding Ford Motor or give up 19.76% of portfolio value over 90 days.

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

Luminar Technologies  vs.  Ford Motor

Luminar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Luminar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Luminar Technologies and Ford

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

The idea behind Luminar Technologies and Ford Motor 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.