Correlation Between Innoviz Technologies and Lear
Can any of the company-specific risk be diversified away by investing in both Innoviz Technologies and Lear 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 Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innoviz Technologies and Lear Corporation, you can compare the effects of market volatilities on Innoviz Technologies and Lear 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 Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innoviz Technologies and Lear.
Diversification Opportunities for Innoviz Technologies and Lear
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innoviz and Lear is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Lear go up and down completely randomly.
Pair Corralation between Innoviz Technologies and Lear
Given the investment horizon of 90 days Innoviz Technologies is expected to generate 3.24 times more return on investment than Lear. However, Innoviz Technologies is 3.24 times more volatile than Lear Corporation. It trades about 0.04 of its potential returns per unit of risk. Lear Corporation is currently generating about -0.13 per unit of risk. If you would invest 66.00 in Innoviz Technologies on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Innoviz Technologies or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innoviz Technologies vs. Lear Corp.
Performance |
| Timeline |
| Innoviz Technologies |
| Lear |
Innoviz Technologies and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innoviz Technologies and Lear
The main advantage of trading using opposite Innoviz Technologies and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innoviz Technologies position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear'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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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