Correlation Between Innoviz Technologies and Ciena Corp

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

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

Diversification Opportunities for Innoviz Technologies and Ciena Corp

-0.48

Correlation Coefficient

Innoviz Technologies  Ciena Corp

Very good diversification

The 3 months correlation between Innoviz and Ciena is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Innoviz Technologies 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 Innoviz Technologies are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Ciena Corp go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Ciena Corp

Assuming the 90 days horizon Innoviz Technologies is expected to generate 62.26 times more return on investment than Ciena Corp. However, Innoviz Technologies is 62.26 times more volatile than Ciena Corp. It trades about 0.15 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.17 per unit of risk. If you would invest  0.00  in Innoviz Technologies on September 3, 2024 and sell it today you would earn a total of  9.39  from holding Innoviz Technologies or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.81%
Values	Daily Returns

Innoviz Technologies  vs.  Ciena Corp

Innoviz Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Ciena Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ciena Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Ciena Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innoviz Technologies and Ciena Corp

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

The idea behind Innoviz Technologies and Ciena Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.