Correlation Between Box and Aeye
Can any of the company-specific risk be diversified away by investing in both Box and Aeye 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 Box and Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Box Inc and Aeye Inc, you can compare the effects of market volatilities on Box and Aeye 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 Box with a short position of Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Aeye.
Diversification Opportunities for Box and Aeye
Excellent diversification
The 3 months correlation between Box and Aeye is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc and Box 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 Box Inc are associated (or correlated) with Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Box i.e., Box and Aeye go up and down completely randomly.
Pair Corralation between Box and Aeye
Considering the 90-day investment horizon Box Inc is expected to generate 0.3 times more return on investment than Aeye. However, Box Inc is 3.37 times less risky than Aeye. It trades about 0.14 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.24 per unit of risk. If you would invest 3,200 in Box Inc on August 23, 2024 and sell it today you would earn a total of 117.00 from holding Box Inc or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Box Inc vs. Aeye Inc
Performance |
| Timeline |
| Box Inc |
| Aeye Inc |
Box and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Box and Aeye
The main advantage of trading using opposite Box and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.The idea behind Box Inc and Aeye Inc 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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