Correlation Between Luminar Technologies and Innoviz Technologies

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

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

Diversification Opportunities for Luminar Technologies and Innoviz Technologies

0.62

Correlation Coefficient

Luminar Technologies  Innoviz Technologies

Poor diversification

The 3 months correlation between Luminar and Innoviz is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies and Luminar 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 Luminar Technologies 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 Luminar Technologies i.e., Luminar Technologies and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Luminar Technologies and Innoviz Technologies

Given the investment horizon of 90 days Luminar Technologies is expected to generate 1.18 times less return on investment than Innoviz Technologies. In addition to that, Luminar Technologies is 1.73 times more volatile than Innoviz Technologies. It trades about 0.09 of its total potential returns per unit of risk. Innoviz Technologies is currently generating about 0.19 per unit of volatility. If you would invest  68.00  in Innoviz Technologies on July 14, 2024 and sell it today you would earn a total of  12.00  from holding Innoviz Technologies or generate 17.65% return on investment over 90 days.

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

Luminar Technologies  vs.  Innoviz Technologies

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 fairly strong basic indicators, Innoviz Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luminar Technologies and Innoviz Technologies

The main advantage of trading using opposite Luminar Technologies and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luminar Technologies 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 Luminar Technologies 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.