Correlation Between Dana and Aeva Technologies
Can any of the company-specific risk be diversified away by investing in both Dana and Aeva 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 Dana and Aeva Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and Aeva Technologies, you can compare the effects of market volatilities on Dana and Aeva 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 Dana with a short position of Aeva Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Aeva Technologies.
Diversification Opportunities for Dana and Aeva Technologies
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dana and Aeva is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies and Dana 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 Dana Inc are associated (or correlated) with Aeva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeva Technologies has no effect on the direction of Dana i.e., Dana and Aeva Technologies go up and down completely randomly.
Pair Corralation between Dana and Aeva Technologies
Considering the 90-day investment horizon Dana Inc is expected to under-perform the Aeva Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Dana Inc is 1.14 times less risky than Aeva Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The Aeva Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 405.00 in Aeva Technologies on August 26, 2024 and sell it today you would earn a total of 20.00 from holding Aeva Technologies or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Aeva Technologies
Performance |
| Timeline |
| Dana Inc |
| Aeva Technologies |
Dana and Aeva Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Aeva Technologies
The main advantage of trading using opposite Dana and Aeva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Aeva 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 Aeva Technologies will offset losses from the drop in Aeva Technologies' long position.The idea behind Dana Inc and Aeva 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.| Aeva Technologies vs. Innoviz Technologies | Aeva Technologies vs. Hesai Group American | Aeva Technologies vs. Luminar Technologies | Aeva Technologies vs. Aeye Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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