Correlation Between Lear and Mobileye Global

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

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

Diversification Opportunities for Lear and Mobileye Global

-0.64

Correlation Coefficient

Lear  Mobileye Global

Excellent diversification

The 3 months correlation between Lear and Mobileye is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Mobileye Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileye Global Class and Lear 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 Lear Corporation are associated (or correlated) with Mobileye Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileye Global Class has no effect on the direction of Lear i.e., Lear and Mobileye Global go up and down completely randomly.

Pair Corralation between Lear and Mobileye Global

Considering the 90-day investment horizon Lear Corporation is expected to generate 0.43 times more return on investment than Mobileye Global. However, Lear Corporation is 2.34 times less risky than Mobileye Global. It trades about -0.04 of its potential returns per unit of risk. Mobileye Global Class is currently generating about -0.03 per unit of risk. If you would invest  13,757  in Lear Corporation on September 12, 2024 and sell it today you would lose (3,574) from holding Lear Corporation or give up 25.98% of portfolio value over 90 days.

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

Lear Corp.  vs.  Mobileye Global Class

Lear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Lear is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mobileye Global Class

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lear and Mobileye Global

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

The idea behind Lear Corporation and Mobileye Global Class 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.