Correlation Between Xos Equity and Innoviz Technologies

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

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

Diversification Opportunities for Xos Equity and Innoviz Technologies

-0.13

Correlation Coefficient

Xos Equity  Innoviz Technologies

Good diversification

The 3 months correlation between Xos and Innoviz is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Xos Equity 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 Xos Equity Warrants 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 Xos Equity i.e., Xos Equity and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Xos Equity and Innoviz Technologies

Assuming the 90 days horizon Xos Equity is expected to generate 1.13 times less return on investment than Innoviz Technologies. In addition to that, Xos Equity is 1.44 times more volatile than Innoviz Technologies. It trades about 0.22 of its total potential returns per unit of risk. Innoviz Technologies is currently generating about 0.35 per unit of volatility. If you would invest  7.50  in Innoviz Technologies on October 7, 2024 and sell it today you would earn a total of  10.50  from holding Innoviz Technologies or generate 140.0% return on investment over 90 days.

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

Xos Equity Warrants  vs.  Innoviz Technologies

Xos Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Xos Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Innoviz Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xos Equity and Innoviz Technologies

The main advantage of trading using opposite Xos Equity and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos Equity 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 Xos Equity Warrants 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.