Correlation Between Aeye and Innoviz Technologies

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

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

Diversification Opportunities for Aeye and Innoviz Technologies

0.79

Correlation Coefficient

Aeye  Innoviz Technologies

Poor diversification

The 3 months correlation between Aeye and Innoviz is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Aeye 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 Aeye Inc are associated (or correlated) with Innoviz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviz Technologies has no effect on the direction of Aeye i.e., Aeye and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Aeye and Innoviz Technologies

Given the investment horizon of 90 days Aeye Inc is expected to generate 1.4 times more return on investment than Innoviz Technologies. However, Aeye is 1.4 times more volatile than Innoviz Technologies. It trades about -0.1 of its potential returns per unit of risk. Innoviz Technologies is currently generating about -0.18 per unit of risk. If you would invest  169.00  in Aeye Inc on December 28, 2024 and sell it today you would lose (110.00) from holding Aeye Inc or give up 65.09% of portfolio value over 90 days.

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

Aeye Inc  vs.  Innoviz Technologies

Aeye Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Innoviz Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innoviz Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aeye and Innoviz Technologies

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

The idea behind Aeye Inc and Innoviz 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.