Correlation Between Mobileye Global and Capital Group

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

Diversification Opportunities for Mobileye Global and Capital Group

0.25

Correlation Coefficient

Mobileye Global  Capital Group

Modest diversification

The 3 months correlation between Mobileye and Capital is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Mobileye Global i.e., Mobileye Global and Capital Group go up and down completely randomly.

Pair Corralation between Mobileye Global and Capital Group

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the Capital Group. In addition to that, Mobileye Global is 4.12 times more volatile than Capital Group Global. It trades about -0.07 of its total potential returns per unit of risk. Capital Group Global is currently generating about -0.02 per unit of volatility. If you would invest  2,964  in Capital Group Global on December 22, 2024 and sell it today you would lose (51.00) from holding Capital Group Global or give up 1.72% of portfolio value over 90 days.

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

Mobileye Global Class  vs.  Capital Group Global

Mobileye Global Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mobileye Global Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Capital Group Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Group Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mobileye Global and Capital Group

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

The idea behind Mobileye Global Class and Capital Group Global 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.