Correlation Between Fox Factory and Aeva Technologies

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

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

Diversification Opportunities for Fox Factory and Aeva Technologies

0.74

Correlation Coefficient

Fox Factory  Aeva Technologies

Poor diversification

The 3 months correlation between Fox and Aeva is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Aeva Technologies go up and down completely randomly.

Pair Corralation between Fox Factory and Aeva Technologies

Given the investment horizon of 90 days Fox Factory Holding is expected to generate 0.53 times more return on investment than Aeva Technologies. However, Fox Factory Holding is 1.9 times less risky than Aeva Technologies. It trades about -0.03 of its potential returns per unit of risk. Aeva Technologies is currently generating about -0.03 per unit of risk. If you would invest  8,685  in Fox Factory Holding on March 2, 2024 and sell it today you would lose (4,101) from holding Fox Factory Holding or give up 47.22% of portfolio value over 90 days.

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

Fox Factory Holding  vs.  Aeva Technologies

Fox Factory Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aeva Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fox Factory and Aeva Technologies

The main advantage of trading using opposite Fox Factory and Aeva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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 Fox Factory Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.