Correlation Between Diageo PLC and Mobix Labs

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

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

Diversification Opportunities for Diageo PLC and Mobix Labs

0.12

Correlation Coefficient

Diageo PLC  Mobix Labs

Average diversification

The 3 months correlation between Diageo and Mobix is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Mobix Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobix Labs has no effect on the direction of Diageo PLC i.e., Diageo PLC and Mobix Labs go up and down completely randomly.

Pair Corralation between Diageo PLC and Mobix Labs

Considering the 90-day investment horizon Diageo PLC is expected to generate 57.36 times less return on investment than Mobix Labs. But when comparing it to its historical volatility, Diageo PLC ADR is 11.37 times less risky than Mobix Labs. It trades about 0.03 of its potential returns per unit of risk. Mobix Labs is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Mobix Labs on October 10, 2024 and sell it today you would earn a total of  45.00  from holding Mobix Labs or generate 42.45% return on investment over 90 days.

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

Diageo PLC ADR  vs.  Mobix Labs

Diageo PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mobix Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobix Labs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Mobix Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diageo PLC and Mobix Labs

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

The idea behind Diageo PLC ADR and Mobix Labs 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..