Correlation Between Innoviz Technologies and Valeo SE

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

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

Diversification Opportunities for Innoviz Technologies and Valeo SE

-0.28

Correlation Coefficient

Innoviz Technologies  Valeo SE

Very good diversification

The 3 months correlation between Innoviz and Valeo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Valeo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo SE 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 Valeo SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SE has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Valeo SE go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Valeo SE

Assuming the 90 days horizon Innoviz Technologies is expected to generate 3.37 times more return on investment than Valeo SE. However, Innoviz Technologies is 3.37 times more volatile than Valeo SE. It trades about 0.32 of its potential returns per unit of risk. Valeo SE is currently generating about 0.23 per unit of risk. If you would invest  8.94  in Innoviz Technologies on October 10, 2024 and sell it today you would earn a total of  11.06  from holding Innoviz Technologies or generate 123.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Innoviz Technologies  vs.  Valeo SE

Innoviz Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 10 (%) 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.

Valeo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Innoviz Technologies and Valeo SE

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

The idea behind Innoviz Technologies and Valeo SE 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.