Correlation Between Sumitomo Electric and Innoviz Technologies
Can any of the company-specific risk be diversified away by investing in both Sumitomo Electric 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 Sumitomo Electric and Innoviz Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Electric Industries and Innoviz Technologies, you can compare the effects of market volatilities on Sumitomo Electric 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 Sumitomo Electric with a short position of Innoviz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Electric and Innoviz Technologies.
Diversification Opportunities for Sumitomo Electric and Innoviz Technologies
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Innoviz is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Electric Industries and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Sumitomo Electric 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 Sumitomo Electric Industries 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 Sumitomo Electric i.e., Sumitomo Electric and Innoviz Technologies go up and down completely randomly.
Pair Corralation between Sumitomo Electric and Innoviz Technologies
Assuming the 90 days horizon Sumitomo Electric Industries is expected to under-perform the Innoviz Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sumitomo Electric Industries is 3.77 times less risky than Innoviz Technologies. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Innoviz Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Innoviz Technologies on December 5, 2024 and sell it today you would earn a total of 6.00 from holding Innoviz Technologies or generate 9.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Sumitomo Electric Industries vs. Innoviz Technologies
Performance |
Timeline |
Sumitomo Electric |
Innoviz Technologies |
Sumitomo Electric and Innoviz Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Electric and Innoviz Technologies
The main advantage of trading using opposite Sumitomo Electric and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Electric 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.Sumitomo Electric vs. American Axle Manufacturing | Sumitomo Electric vs. Lear Corporation | Sumitomo Electric vs. Commercial Vehicle Group | Sumitomo Electric vs. Adient PLC |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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