Correlation Between Mobileye Global and NEXE Innovations

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

Diversification Opportunities for Mobileye Global and NEXE Innovations

-0.18

Correlation Coefficient

Mobileye Global  NEXE Innovations

Good diversification

The 3 months correlation between Mobileye and NEXE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and NEXE Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXE Innovations 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 NEXE Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXE Innovations has no effect on the direction of Mobileye Global i.e., Mobileye Global and NEXE Innovations go up and down completely randomly.

Pair Corralation between Mobileye Global and NEXE Innovations

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the NEXE Innovations. In addition to that, Mobileye Global is 1.1 times more volatile than NEXE Innovations. It trades about -0.13 of its total potential returns per unit of risk. NEXE Innovations is currently generating about -0.07 per unit of volatility. If you would invest  27.00  in NEXE Innovations on October 22, 2024 and sell it today you would lose (2.00) from holding NEXE Innovations or give up 7.41% of portfolio value over 90 days.

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

Mobileye Global Class  vs.  NEXE Innovations

Mobileye Global Class

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 7 (%) 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.

NEXE Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXE Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mobileye Global and NEXE Innovations

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

The idea behind Mobileye Global Class and NEXE Innovations 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 CEOs Directory module to screen CEOs from public companies around the world.