Correlation Between Westport Fuel and Aeye
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Aeye 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 Aeye 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 Aeye Inc, you can compare the effects of market volatilities on Westport Fuel and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Aeye.
Diversification Opportunities for Westport Fuel and Aeye
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and Aeye is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Westport Fuel i.e., Westport Fuel and Aeye go up and down completely randomly.
Pair Corralation between Westport Fuel and Aeye
Given the investment horizon of 90 days Westport Fuel Systems is expected to under-perform the Aeye. But the stock apears to be less risky and, when comparing its historical volatility, Westport Fuel Systems is 4.75 times less risky than Aeye. The stock trades about -0.07 of its potential returns per unit of risk. The Aeye Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Aeye Inc on October 20, 2024 and sell it today you would lose (2.00) from holding Aeye Inc or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Aeye Inc
Performance |
| Timeline |
| Westport Fuel Systems |
| Aeye Inc |
Westport Fuel and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Aeye
The main advantage of trading using opposite Westport Fuel and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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