Correlation Between Aeva Technologies, and Solid Power

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

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

Diversification Opportunities for Aeva Technologies, and Solid Power

0.66

Correlation Coefficient

Aeva Technologies,  Solid Power

Poor diversification

The 3 months correlation between Aeva and Solid is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aeva Technologies, Common and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and Aeva 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 Aeva Technologies, Common are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Aeva Technologies, i.e., Aeva Technologies, and Solid Power go up and down completely randomly.

Pair Corralation between Aeva Technologies, and Solid Power

Given the investment horizon of 90 days Aeva Technologies, Common is expected to generate 1.59 times more return on investment than Solid Power. However, Aeva Technologies, is 1.59 times more volatile than Solid Power. It trades about 0.08 of its potential returns per unit of risk. Solid Power is currently generating about -0.24 per unit of risk. If you would invest  477.00  in Aeva Technologies, Common on December 27, 2024 and sell it today you would earn a total of  103.00  from holding Aeva Technologies, Common or generate 21.59% return on investment over 90 days.

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

Aeva Technologies, Common  vs.  Solid Power

Aeva Technologies, Common

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeva Technologies, Common are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aeva Technologies, sustained solid returns over the last few months and may actually be approaching a breakup point.

Solid Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solid Power 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 fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aeva Technologies, and Solid Power

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

The idea behind Aeva Technologies, Common and Solid Power 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.