Correlation Between Mobileye Global and Revive Therapeutics

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

Diversification Opportunities for Mobileye Global and Revive Therapeutics

-0.04

Correlation Coefficient

Mobileye Global  Revive Therapeutics

Good diversification

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

Pair Corralation between Mobileye Global and Revive Therapeutics

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the Revive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Mobileye Global Class is 1.54 times less risky than Revive Therapeutics. The stock trades about -0.13 of its potential returns per unit of risk. The Revive Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.62  in Revive Therapeutics on October 23, 2024 and sell it today you would lose (0.02) from holding Revive Therapeutics or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Mobileye Global Class  vs.  Revive Therapeutics

Mobileye Global Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 8 (%) 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.

Revive Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Revive Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Revive Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobileye Global and Revive Therapeutics

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

The idea behind Mobileye Global Class and Revive Therapeutics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.