Correlation Between Microbot Medical and EBay

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

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

Diversification Opportunities for Microbot Medical and EBay

0.62

Correlation Coefficient

Microbot Medical  EBay

Poor diversification

The 3 months correlation between Microbot and EBay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Microbot Medical 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 Microbot Medical are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Microbot Medical i.e., Microbot Medical and EBay go up and down completely randomly.

Pair Corralation between Microbot Medical and EBay

Assuming the 90 days trading horizon Microbot Medical is expected to under-perform the EBay. In addition to that, Microbot Medical is 2.83 times more volatile than eBay Inc. It trades about -0.16 of its total potential returns per unit of risk. eBay Inc is currently generating about -0.07 per unit of volatility. If you would invest  6,542  in eBay Inc on December 5, 2024 and sell it today you would lose (302.00) from holding eBay Inc or give up 4.62% of portfolio value over 90 days.

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

Microbot Medical  vs.  eBay Inc

Microbot Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

eBay Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EBay is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microbot Medical and EBay

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

The idea behind Microbot Medical and eBay Inc 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.