Correlation Between NVIDIA and Mobix Labs

Can any of the company-specific risk be diversified away by investing in both NVIDIA and Mobix Labs 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 NVIDIA and Mobix Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NVIDIA and Mobix Labs, you can compare the effects of market volatilities on NVIDIA and Mobix Labs 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 NVIDIA with a short position of Mobix Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Mobix Labs.

Diversification Opportunities for NVIDIA and Mobix Labs

-0.38

Correlation Coefficient

NVIDIA  Mobix Labs

Very good diversification

The 3 months correlation between NVIDIA and Mobix is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs and NVIDIA 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 NVIDIA are associated (or correlated) with Mobix Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobix Labs has no effect on the direction of NVIDIA i.e., NVIDIA and Mobix Labs go up and down completely randomly.

Pair Corralation between NVIDIA and Mobix Labs

Given the investment horizon of 90 days NVIDIA is expected to generate 0.33 times more return on investment than Mobix Labs. However, NVIDIA is 3.0 times less risky than Mobix Labs. It trades about 0.13 of its potential returns per unit of risk. Mobix Labs is currently generating about -0.02 per unit of risk. If you would invest  4,822  in NVIDIA on September 21, 2024 and sell it today you would earn a total of  8,246  from holding NVIDIA or generate 171.01% return on investment over 90 days.

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

NVIDIA  vs.  Mobix Labs

NVIDIA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Mobix Labs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobix Labs are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Mobix Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Mobix Labs

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

The idea behind NVIDIA and Mobix Labs 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.