Correlation Between Gentex and Aeva Technologies

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

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

Diversification Opportunities for Gentex and Aeva Technologies

0.45

Correlation Coefficient

Gentex  Aeva Technologies

Very weak diversification

The 3 months correlation between Gentex and Aeva is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies and Gentex 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 Gentex are associated (or correlated) with Aeva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeva Technologies has no effect on the direction of Gentex i.e., Gentex and Aeva Technologies go up and down completely randomly.

Pair Corralation between Gentex and Aeva Technologies

Given the investment horizon of 90 days Gentex is expected to generate 35.78 times less return on investment than Aeva Technologies. But when comparing it to its historical volatility, Gentex is 3.4 times less risky than Aeva Technologies. It trades about 0.02 of its potential returns per unit of risk. Aeva Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Aeva Technologies on September 3, 2024 and sell it today you would earn a total of  175.00  from holding Aeva Technologies or generate 63.41% return on investment over 90 days.

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

Gentex  vs.  Aeva Technologies

Gentex

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Aeva Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeva Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aeva Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentex and Aeva Technologies

The main advantage of trading using opposite Gentex and Aeva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Aeva 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 Aeva Technologies will offset losses from the drop in Aeva Technologies' long position.

The idea behind Gentex and Aeva 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.