Correlation Between Innoviz Technologies and Aeva Technologies

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

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

Diversification Opportunities for Innoviz Technologies and Aeva Technologies

-0.22

Correlation Coefficient

Innoviz Technologies  Aeva Technologies

Very good diversification

The 3 months correlation between Innoviz and Aeva is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies 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 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 Innoviz Technologies i.e., Innoviz Technologies and Aeva Technologies go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Aeva Technologies

Assuming the 90 days horizon Innoviz Technologies is expected to generate 4.16 times more return on investment than Aeva Technologies. However, Innoviz Technologies is 4.16 times more volatile than Aeva Technologies. It trades about 0.32 of its potential returns per unit of risk. Aeva Technologies is currently generating about -0.02 per unit of risk. If you would invest  8.50  in Innoviz Technologies on September 26, 2024 and sell it today you would earn a total of  11.50  from holding Innoviz Technologies or generate 135.29% return on investment over 90 days.

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

Innoviz Technologies  vs.  Aeva Technologies

Innoviz Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Aeva Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aeva Technologies are ranked lower than 7 (%) 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 Innoviz Technologies and Aeva Technologies

The main advantage of trading using opposite Innoviz Technologies and Aeva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innoviz Technologies 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 Innoviz Technologies 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 .