Correlation Between Holley and Aeva Technologies

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

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

Diversification Opportunities for Holley and Aeva Technologies

-0.51

Correlation Coefficient

Holley  Aeva Technologies

Excellent diversification

The 3 months correlation between Holley and Aeva is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Holley Inc and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies and Holley 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 Holley Inc are associated (or correlated) with Aeva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeva Technologies has no effect on the direction of Holley i.e., Holley and Aeva Technologies go up and down completely randomly.

Pair Corralation between Holley and Aeva Technologies

Given the investment horizon of 90 days Holley Inc is expected to under-perform the Aeva Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Holley Inc is 1.92 times less risky than Aeva Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Aeva Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Aeva Technologies on September 14, 2024 and sell it today you would earn a total of  157.00  from holding Aeva Technologies or generate 56.88% return on investment over 90 days.

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

Holley Inc  vs.  Aeva Technologies

Holley Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holley Inc 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aeva Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeva Technologies are ranked lower than 12 (%) 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.

Pair Trading with Holley and Aeva Technologies

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

The idea behind Holley Inc and Aeva Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .