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

-0.36

Correlation Coefficient

Innoviz Technologies  Lear

Very good diversification

The 3 months correlation between Innoviz and Lear is -0.36. 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

Assuming the 90 days horizon Innoviz Technologies is expected to generate 52.35 times more return on investment than Lear. However, Innoviz Technologies is 52.35 times more volatile than Lear Corporation. It trades about 0.09 of its potential returns per unit of risk. Lear Corporation is currently generating about -0.06 per unit of risk. If you would invest  47.00  in Innoviz Technologies on October 21, 2024 and sell it today you would lose (28.00) from holding Innoviz Technologies or give up 59.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Innoviz Technologies  vs.  Lear Corp.

Innoviz Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 9 (%) 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.

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 latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.