Correlation Between Mobileye Global and California Intermediate

Can any of the company-specific risk be diversified away by investing in both Mobileye Global and California Intermediate 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 California Intermediate 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 California Intermediate Term Tax Free, you can compare the effects of market volatilities on Mobileye Global and California Intermediate 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 California Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileye Global and California Intermediate.

Diversification Opportunities for Mobileye Global and California Intermediate

-0.21

Correlation Coefficient

Mobileye Global  California Intermediate

Very good diversification

The 3 months correlation between Mobileye and California is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and California Intermediate Term T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Intermediate 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 California Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Intermediate has no effect on the direction of Mobileye Global i.e., Mobileye Global and California Intermediate go up and down completely randomly.

Pair Corralation between Mobileye Global and California Intermediate

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 21.62 times more return on investment than California Intermediate. However, Mobileye Global is 21.62 times more volatile than California Intermediate Term Tax Free. It trades about 0.31 of its potential returns per unit of risk. California Intermediate Term Tax Free is currently generating about -0.32 per unit of risk. If you would invest  1,700  in Mobileye Global Class on October 7, 2024 and sell it today you would earn a total of  470.00  from holding Mobileye Global Class or generate 27.65% return on investment over 90 days.

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

Mobileye Global Class  vs.  California Intermediate Term T

Mobileye Global Class

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 17 (%) 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.

California Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Intermediate Term Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, California Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mobileye Global and California Intermediate

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

The idea behind Mobileye Global Class and California Intermediate Term Tax Free 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.