Correlation Between VHAI and Aeva Technologies

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

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

Diversification Opportunities for VHAI and Aeva Technologies

-0.54

Correlation Coefficient

VHAI  Aeva Technologies

Excellent diversification

The 3 months correlation between VHAI and Aeva is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies and VHAI 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 VHAI 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 VHAI i.e., VHAI and Aeva Technologies go up and down completely randomly.

Pair Corralation between VHAI and Aeva Technologies

Given the investment horizon of 90 days VHAI is expected to under-perform the Aeva Technologies. In addition to that, VHAI is 2.49 times more volatile than Aeva Technologies. It trades about -0.11 of its total potential returns per unit of risk. Aeva Technologies is currently generating about 0.08 per unit of volatility. If you would invest  306.00  in Aeva Technologies on September 3, 2024 and sell it today you would earn a total of  145.00  from holding Aeva Technologies or generate 47.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

VHAI  vs.  Aeva Technologies

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 VHAI and Aeva Technologies

The main advantage of trading using opposite VHAI and Aeva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.