Correlation Between Innoviz Technologies and Ubiquiti Networks

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

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

Diversification Opportunities for Innoviz Technologies and Ubiquiti Networks

-0.61

Correlation Coefficient

Innoviz Technologies  Ubiquiti Networks

Excellent diversification

The 3 months correlation between Innoviz and Ubiquiti is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks 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 Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Ubiquiti Networks

Assuming the 90 days horizon Innoviz Technologies is expected to generate 44.68 times more return on investment than Ubiquiti Networks. However, Innoviz Technologies is 44.68 times more volatile than Ubiquiti Networks. It trades about 0.15 of its potential returns per unit of risk. Ubiquiti Networks is currently generating about 0.31 per unit of risk. If you would invest  0.00  in Innoviz Technologies on September 3, 2024 and sell it today you would earn a total of  9.39  from holding Innoviz Technologies or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	82.81%
Values	Daily Returns

Innoviz Technologies  vs.  Ubiquiti Networks

Innoviz Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 11 (%) 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.

Ubiquiti Networks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Ubiquiti Networks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innoviz Technologies and Ubiquiti Networks

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

The idea behind Innoviz Technologies and Ubiquiti Networks 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.