Correlation Between Stoneridge and Innoviz Technologies

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

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

Diversification Opportunities for Stoneridge and Innoviz Technologies

0.53

Correlation Coefficient

Stoneridge  Innoviz Technologies

Very weak diversification

The 3 months correlation between Stoneridge and Innoviz is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Stoneridge 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 Stoneridge 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 Stoneridge i.e., Stoneridge and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Stoneridge and Innoviz Technologies

Considering the 90-day investment horizon Stoneridge is expected to generate 0.68 times more return on investment than Innoviz Technologies. However, Stoneridge is 1.46 times less risky than Innoviz Technologies. It trades about -0.03 of its potential returns per unit of risk. Innoviz Technologies is currently generating about -0.16 per unit of risk. If you would invest  621.00  in Stoneridge on December 27, 2024 and sell it today you would lose (102.00) from holding Stoneridge or give up 16.43% of portfolio value over 90 days.

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

Stoneridge  vs.  Innoviz Technologies

Stoneridge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 Stoneridge and Innoviz Technologies

The main advantage of trading using opposite Stoneridge and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge 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 Stoneridge 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.