Correlation Between Innoviz Technologies and BorgWarner

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

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

Diversification Opportunities for Innoviz Technologies and BorgWarner

0.46

Correlation Coefficient

Innoviz Technologies  BorgWarner

Very weak diversification

The 3 months correlation between Innoviz and BorgWarner is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Innoviz 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 Innoviz Technologies are associated (or correlated) with BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and BorgWarner go up and down completely randomly.

Pair Corralation between Innoviz Technologies and BorgWarner

Given the investment horizon of 90 days Innoviz Technologies is expected to generate 3.75 times more return on investment than BorgWarner. However, Innoviz Technologies is 3.75 times more volatile than BorgWarner. It trades about 0.07 of its potential returns per unit of risk. BorgWarner is currently generating about 0.04 per unit of risk. If you would invest  56.00  in Innoviz Technologies on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Innoviz Technologies or generate 19.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Innoviz Technologies  vs.  BorgWarner

Innoviz Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

BorgWarner

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BorgWarner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innoviz Technologies and BorgWarner

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

The idea behind Innoviz Technologies and BorgWarner 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 CEOs Directory module to screen CEOs from public companies around the world.