Correlation Between Innoviz Technologies and Lear

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

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

Diversification Opportunities for Innoviz Technologies and Lear

0.7

Correlation Coefficient

Innoviz Technologies  Lear

Poor diversification

The 3 months correlation between Innoviz and Lear is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Lear go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Lear

Given the investment horizon of 90 days Innoviz Technologies is expected to under-perform the Lear. In addition to that, Innoviz Technologies is 3.21 times more volatile than Lear Corporation. It trades about -0.03 of its total potential returns per unit of risk. Lear Corporation is currently generating about -0.04 per unit of volatility. If you would invest  13,757  in Lear Corporation on September 12, 2024 and sell it today you would lose (3,574) from holding Lear Corporation or give up 25.98% of portfolio value over 90 days.

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

Innoviz Technologies  vs.  Lear Corp.

Innoviz Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innoviz Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Lear 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 Lear

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

The idea behind Innoviz Technologies and Lear Corporation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..