Correlation Between Valeo SE and Innoviz Technologies

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

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

Diversification Opportunities for Valeo SE and Innoviz Technologies

-0.28

Correlation Coefficient

Valeo SE  Innoviz Technologies

Very good diversification

The 3 months correlation between Valeo and Innoviz is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SE and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Valeo SE 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 Valeo SE 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 Valeo SE i.e., Valeo SE and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Valeo SE and Innoviz Technologies

Assuming the 90 days horizon Valeo SE is expected to generate 0.69 times more return on investment than Innoviz Technologies. However, Valeo SE is 1.45 times less risky than Innoviz Technologies. It trades about 0.0 of its potential returns per unit of risk. Innoviz Technologies is currently generating about -0.03 per unit of risk. If you would invest  2,206  in Valeo SE on February 23, 2024 and sell it today you would lose (694.00) from holding Valeo SE or give up 31.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Valeo SE  vs.  Innoviz Technologies

Valeo SE

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valeo SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Valeo SE reported solid returns over the last few months and may actually be approaching a breakup point.

Innoviz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innoviz Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Valeo SE and Innoviz Technologies

The main advantage of trading using opposite Valeo SE and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeo SE 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 Valeo SE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.