Correlation Between Magna International and Lucid

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

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

Diversification Opportunities for Magna International and Lucid

-0.62

Correlation Coefficient

Magna International  Lucid

Excellent diversification

The 3 months correlation between Magna and Lucid is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Magna International 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 Magna International 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 Magna International i.e., Magna International and Lucid go up and down completely randomly.

Pair Corralation between Magna International and Lucid

Considering the 90-day investment horizon Magna International is expected to generate 0.65 times more return on investment than Lucid. However, Magna International is 1.55 times less risky than Lucid. It trades about 0.17 of its potential returns per unit of risk. Lucid Group is currently generating about -0.12 per unit of risk. If you would invest  4,116  in Magna International on August 30, 2024 and sell it today you would earn a total of  379.00  from holding Magna International or generate 9.21% return on investment over 90 days.

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

Magna International  vs.  Lucid Group

Magna International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Magna International may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

Pair Trading with Magna International and Lucid

The main advantage of trading using opposite Magna International and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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 Magna International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.