Correlation Between Lucid and Stellantis

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

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

Diversification Opportunities for Lucid and Stellantis

0.73

Correlation Coefficient

Lucid  Stellantis

Poor diversification

The 3 months correlation between Lucid and Stellantis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV 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 Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of Lucid i.e., Lucid and Stellantis go up and down completely randomly.

Pair Corralation between Lucid and Stellantis

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Stellantis. In addition to that, Lucid is 1.63 times more volatile than Stellantis NV. It trades about -0.2 of its total potential returns per unit of risk. Stellantis NV is currently generating about -0.11 per unit of volatility. If you would invest  1,591  in Stellantis NV on September 1, 2024 and sell it today you would lose (271.00) from holding Stellantis NV or give up 17.03% of portfolio value over 90 days.

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

Lucid Group  vs.  Stellantis NV

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 unfluctuating performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Stellantis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lucid and Stellantis

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

The idea behind Lucid Group and Stellantis NV 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.