Correlation Between Allego and Innoviz Technologies

Can any of the company-specific risk be diversified away by investing in both Allego 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 Allego and Innoviz Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allego Inc and Innoviz Technologies, you can compare the effects of market volatilities on Allego 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 Allego with a short position of Innoviz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allego and Innoviz Technologies.

Diversification Opportunities for Allego and Innoviz Technologies

0.32

Correlation Coefficient

Allego  Innoviz Technologies

Weak diversification

The 3 months correlation between Allego and Innoviz is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Allego Inc and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Allego 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 Allego Inc 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 Allego i.e., Allego and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Allego and Innoviz Technologies

Given the investment horizon of 90 days Allego Inc is expected to generate 2.16 times more return on investment than Innoviz Technologies. However, Allego is 2.16 times more volatile than Innoviz Technologies. It trades about 0.05 of its potential returns per unit of risk. Innoviz Technologies is currently generating about 0.05 per unit of risk. If you would invest  202.00  in Allego Inc on August 30, 2024 and sell it today you would lose (11.00) from holding Allego Inc or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	64.06%
Values	Daily Returns

Allego Inc  vs.  Innoviz Technologies

Allego Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Allego Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak essential indicators, Allego reported solid returns over the last few months and may actually be approaching a breakup point.

Innoviz Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allego and Innoviz Technologies

The main advantage of trading using opposite Allego and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allego 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.

The idea behind Allego Inc and Innoviz Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.