Correlation Between AEye and Joby Aviation

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Can any of the company-specific risk be diversified away by investing in both AEye and Joby Aviation 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 Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEye Inc and Joby Aviation, you can compare the effects of market volatilities on AEye and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and Joby Aviation.

Diversification Opportunities for AEye and Joby Aviation

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AEye and Joby is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of AEye i.e., AEye and Joby Aviation go up and down completely randomly.

Pair Corralation between AEye and Joby Aviation

Assuming the 90 days horizon AEye is expected to generate 1.07 times less return on investment than Joby Aviation. In addition to that, AEye is 1.39 times more volatile than Joby Aviation. It trades about 0.2 of its total potential returns per unit of risk. Joby Aviation is currently generating about 0.29 per unit of volatility. If you would invest  74.00  in Joby Aviation on September 5, 2024 and sell it today you would earn a total of  86.00  from holding Joby Aviation or generate 116.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AEye Inc  vs.  Joby Aviation

 Performance 
       Timeline  
AEye Inc 

Risk-Adjusted Performance

8 of 100

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

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Joby Aviation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Joby Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

AEye and Joby Aviation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AEye and Joby Aviation

The main advantage of trading using opposite AEye and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEye position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.
The idea behind AEye Inc and Joby Aviation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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