Correlation Between Mobileye Global and CARDINAL HEALTH

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

Diversification Opportunities for Mobileye Global and CARDINAL HEALTH

0.8

Correlation Coefficient

Mobileye Global  CARDINAL HEALTH

Very poor diversification

The 3 months correlation between Mobileye and CARDINAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH 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 CARDINAL HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARDINAL HEALTH has no effect on the direction of Mobileye Global i.e., Mobileye Global and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between Mobileye Global and CARDINAL HEALTH

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 2.82 times more return on investment than CARDINAL HEALTH. However, Mobileye Global is 2.82 times more volatile than CARDINAL HEALTH. It trades about 0.23 of its potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.14 per unit of risk. If you would invest  1,224  in Mobileye Global Class on October 8, 2024 and sell it today you would earn a total of  946.00  from holding Mobileye Global Class or generate 77.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Mobileye Global Class  vs.  CARDINAL HEALTH

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 unfluctuating essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

CARDINAL HEALTH

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobileye Global and CARDINAL HEALTH

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

The idea behind Mobileye Global Class and CARDINAL HEALTH 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.