Correlation Between Mobileye Global and US Financial

Can any of the company-specific risk be diversified away by investing in both Mobileye Global and US Financial 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 US Financial 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 US Financial 15, you can compare the effects of market volatilities on Mobileye Global and US Financial 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 US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileye Global and US Financial.

Diversification Opportunities for Mobileye Global and US Financial

0.04

Correlation Coefficient

Mobileye Global  US Financial

Significant diversification

The 3 months correlation between Mobileye and FTU is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 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 US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of Mobileye Global i.e., Mobileye Global and US Financial go up and down completely randomly.

Pair Corralation between Mobileye Global and US Financial

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the US Financial. But the stock apears to be less risky and, when comparing its historical volatility, Mobileye Global Class is 1.32 times less risky than US Financial. The stock trades about -0.08 of its potential returns per unit of risk. The US Financial 15 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  44.00  in US Financial 15 on December 21, 2024 and sell it today you would lose (4.00) from holding US Financial 15 or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Mobileye Global Class  vs.  US Financial 15

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.

US Financial 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Financial 15 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, US Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mobileye Global and US Financial

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

The idea behind Mobileye Global Class and US Financial 15 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.