Correlation Between Lordstown Motors and Ferrari NV

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

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

Diversification Opportunities for Lordstown Motors and Ferrari NV

0.45

Correlation Coefficient

Lordstown Motors  Ferrari NV

Very weak diversification

The 3 months correlation between Lordstown and Ferrari is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lordstown Motors Corp and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV and Lordstown Motors 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 Lordstown Motors Corp are associated (or correlated) with Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of Lordstown Motors i.e., Lordstown Motors and Ferrari NV go up and down completely randomly.

Pair Corralation between Lordstown Motors and Ferrari NV

If you would invest  295.00  in Lordstown Motors Corp on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Lordstown Motors Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Lordstown Motors Corp  vs.  Ferrari NV

Lordstown Motors Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lordstown Motors Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lordstown Motors is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ferrari NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrari NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lordstown Motors and Ferrari NV

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

The idea behind Lordstown Motors Corp and Ferrari 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 Global Correlations module to find global opportunities by holding instruments from different markets.