Correlation Between Valeo SE and Mobileye Global

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

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

Diversification Opportunities for Valeo SE and Mobileye Global

-0.76

Correlation Coefficient

Valeo SE  Mobileye Global

Pay attention - limited upside

The 3 months correlation between Valeo and Mobileye is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SE and Mobileye Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileye Global Class and Valeo SE 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 Valeo SE are associated (or correlated) with Mobileye Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileye Global Class has no effect on the direction of Valeo SE i.e., Valeo SE and Mobileye Global go up and down completely randomly.

Pair Corralation between Valeo SE and Mobileye Global

Assuming the 90 days horizon Valeo SE is expected to generate 1.25 times more return on investment than Mobileye Global. However, Valeo SE is 1.25 times more volatile than Mobileye Global Class. It trades about 0.14 of its potential returns per unit of risk. Mobileye Global Class is currently generating about 0.03 per unit of risk. If you would invest  797.00  in Valeo SE on September 22, 2024 and sell it today you would earn a total of  106.00  from holding Valeo SE or generate 13.3% return on investment over 90 days.

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

Valeo SE  vs.  Mobileye Global Class

Valeo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mobileye Global Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 10 (%) 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.

Pair Trading with Valeo SE and Mobileye Global

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

The idea behind Valeo SE and Mobileye Global Class 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.