Correlation Between Innoviz Technologies and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Innoviz Technologies and Fox Factory 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 Innoviz Technologies and Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innoviz Technologies and Fox Factory Holding, you can compare the effects of market volatilities on Innoviz Technologies and Fox Factory 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 Innoviz Technologies with a short position of Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innoviz Technologies and Fox Factory.
Diversification Opportunities for Innoviz Technologies and Fox Factory
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innoviz and Fox is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and Innoviz Technologies 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 Innoviz Technologies are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Fox Factory go up and down completely randomly.
Pair Corralation between Innoviz Technologies and Fox Factory
Given the investment horizon of 90 days Innoviz Technologies is expected to under-perform the Fox Factory. In addition to that, Innoviz Technologies is 1.4 times more volatile than Fox Factory Holding. It trades about -0.11 of its total potential returns per unit of risk. Fox Factory Holding is currently generating about -0.06 per unit of volatility. If you would invest 4,468 in Fox Factory Holding on August 25, 2024 and sell it today you would lose (1,225) from holding Fox Factory Holding or give up 27.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innoviz Technologies vs. Fox Factory Holding
Performance |
| Timeline |
| Innoviz Technologies |
| Fox Factory Holding |
Innoviz Technologies and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innoviz Technologies and Fox Factory
The main advantage of trading using opposite Innoviz Technologies and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innoviz Technologies position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.| Innoviz Technologies vs. Aeye Inc | Innoviz Technologies vs. Luminar Technologies | Innoviz Technologies vs. Hesai Group American | Innoviz Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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