Correlation Between Innoviz Technologies and Luminar Technologies

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

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

Diversification Opportunities for Innoviz Technologies and Luminar Technologies

0.93

Correlation Coefficient

Innoviz Technologies  Luminar Technologies

Almost no diversification

The 3 months correlation between Innoviz and Luminar is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Innoviz Technologies and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Innoviz Technologies i.e., Innoviz Technologies and Luminar Technologies go up and down completely randomly.

Pair Corralation between Innoviz Technologies and Luminar Technologies

Given the investment horizon of 90 days Innoviz Technologies is expected to under-perform the Luminar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Innoviz Technologies is 1.28 times less risky than Luminar Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Luminar Technologies is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  201.00  in Luminar Technologies on February 4, 2024 and sell it today you would lose (33.00) from holding Luminar Technologies or give up 16.42% of portfolio value over 90 days.

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

Innoviz Technologies  vs.  Luminar Technologies

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.

Luminar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Luminar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Innoviz Technologies and Luminar Technologies

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

The idea behind Innoviz Technologies and Luminar 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..