Correlation Between Autoliv and Innoviz Technologies

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

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

Diversification Opportunities for Autoliv and Innoviz Technologies

-0.5

Correlation Coefficient

Autoliv  Innoviz Technologies

Very good diversification

The 3 months correlation between Autoliv and Innoviz is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Autoliv 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 Autoliv 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 Autoliv i.e., Autoliv and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Autoliv and Innoviz Technologies

Considering the 90-day investment horizon Autoliv is expected to generate 42.58 times less return on investment than Innoviz Technologies. But when comparing it to its historical volatility, Autoliv is 3.26 times less risky than Innoviz Technologies. It trades about 0.01 of its potential returns per unit of risk. Innoviz Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Innoviz Technologies on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Innoviz Technologies or generate 16.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Autoliv  vs.  Innoviz Technologies

Autoliv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autoliv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Autoliv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Innoviz Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 5 (%) 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 Autoliv and Innoviz Technologies

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

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.