Correlation Between Aeye and Dana
Can any of the company-specific risk be diversified away by investing in both Aeye and Dana 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 Aeye and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Dana Inc, you can compare the effects of market volatilities on Aeye and Dana 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 Aeye with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Dana.
Diversification Opportunities for Aeye and Dana
Poor diversification
The 3 months correlation between Aeye and Dana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Aeye 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 Aeye Inc are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Aeye i.e., Aeye and Dana go up and down completely randomly.
Pair Corralation between Aeye and Dana
Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Dana. But the stock apears to be less risky and, when comparing its historical volatility, Aeye Inc is 1.05 times less risky than Dana. The stock trades about -0.06 of its potential returns per unit of risk. The Dana Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,003 in Dana Inc on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Dana Inc or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeye Inc vs. Dana Inc
Performance |
| Timeline |
| Aeye Inc |
| Dana Inc |
Aeye and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Dana
The main advantage of trading using opposite Aeye and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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