Correlation Between Mobileye Global and Autoliv

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

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

Diversification Opportunities for Mobileye Global and Autoliv

0.63

Correlation Coefficient

Mobileye Global  Autoliv

Poor diversification

The 3 months correlation between Mobileye and Autoliv is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Mobileye Global 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 Mobileye Global Class are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of Mobileye Global i.e., Mobileye Global and Autoliv go up and down completely randomly.

Pair Corralation between Mobileye Global and Autoliv

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the Autoliv. In addition to that, Mobileye Global is 2.14 times more volatile than Autoliv. It trades about -0.02 of its total potential returns per unit of risk. Autoliv is currently generating about 0.04 per unit of volatility. If you would invest  7,448  in Autoliv on September 5, 2024 and sell it today you would earn a total of  2,267  from holding Autoliv or generate 30.44% return on investment over 90 days.

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

Mobileye Global Class  vs.  Autoliv

Mobileye Global Class

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

Autoliv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autoliv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Autoliv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mobileye Global and Autoliv

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

The idea behind Mobileye Global Class and Autoliv 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.