Correlation Between AEye and Skillz Platform

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

By analyzing existing cross correlation between AEye Inc and Skillz Platform, you can compare the effects of market volatilities on AEye and Skillz Platform 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 Skillz Platform. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and Skillz Platform.

Diversification Opportunities for AEye and Skillz Platform

-0.3

Correlation Coefficient

AEye  Skillz Platform

Very good diversification

The 3 months correlation between AEye and Skillz is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Skillz Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillz Platform 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 Skillz Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillz Platform has no effect on the direction of AEye i.e., AEye and Skillz Platform go up and down completely randomly.

Pair Corralation between AEye and Skillz Platform

Assuming the 90 days horizon AEye Inc is expected to generate 6.55 times more return on investment than Skillz Platform. However, AEye is 6.55 times more volatile than Skillz Platform. It trades about 0.23 of its potential returns per unit of risk. Skillz Platform is currently generating about 0.0 per unit of risk. If you would invest  1.00  in AEye Inc on September 12, 2024 and sell it today you would earn a total of  0.80  from holding AEye Inc or generate 80.0% return on investment over 90 days.

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

AEye Inc  vs.  Skillz Platform

AEye Inc

Risk-Adjusted Performance

10 of 100

OK

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

Skillz Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skillz Platform has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential 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 AEye and Skillz Platform

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

The idea behind AEye Inc and Skillz Platform 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.