Correlation Between Westport Fuel and Innoviz Technologies
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Innoviz 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 Westport Fuel and Innoviz Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Innoviz Technologies, you can compare the effects of market volatilities on Westport Fuel and Innoviz 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 Westport Fuel with a short position of Innoviz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Innoviz Technologies.
Diversification Opportunities for Westport Fuel and Innoviz Technologies
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westport and Innoviz is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with Innoviz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviz Technologies has no effect on the direction of Westport Fuel i.e., Westport Fuel and Innoviz Technologies go up and down completely randomly.
Pair Corralation between Westport Fuel and Innoviz Technologies
Given the investment horizon of 90 days Westport Fuel Systems is expected to under-perform the Innoviz Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Westport Fuel Systems is 3.34 times less risky than Innoviz Technologies. The stock trades about -0.07 of its potential returns per unit of risk. The Innoviz Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Innoviz Technologies on October 20, 2024 and sell it today you would earn a total of 85.00 from holding Innoviz Technologies or generate 110.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Innoviz Technologies
Performance |
| Timeline |
| Westport Fuel Systems |
| Innoviz Technologies |
Westport Fuel and Innoviz Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Innoviz Technologies
The main advantage of trading using opposite Westport Fuel and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Innoviz 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 Innoviz Technologies will offset losses from the drop in Innoviz Technologies' long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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