Correlation Between Wolfspeed and Mobix Labs

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

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

Diversification Opportunities for Wolfspeed and Mobix Labs

-0.46

Correlation Coefficient

Wolfspeed  Mobix Labs

Very good diversification

The 3 months correlation between Wolfspeed and Mobix is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wolfspeed and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs and Wolfspeed 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 Wolfspeed 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 Wolfspeed i.e., Wolfspeed and Mobix Labs go up and down completely randomly.

Pair Corralation between Wolfspeed and Mobix Labs

Given the investment horizon of 90 days Wolfspeed is expected to under-perform the Mobix Labs. But the stock apears to be less risky and, when comparing its historical volatility, Wolfspeed is 1.4 times less risky than Mobix Labs. The stock trades about -0.06 of its potential returns per unit of risk. The Mobix Labs is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,109  in Mobix Labs on October 3, 2024 and sell it today you would lose (939.00) from holding Mobix Labs or give up 84.67% of portfolio value over 90 days.

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

Wolfspeed  vs.  Mobix Labs

Wolfspeed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolfspeed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent essential indicators, Wolfspeed may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mobix Labs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobix Labs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, Mobix Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wolfspeed and Mobix Labs

The main advantage of trading using opposite Wolfspeed and Mobix Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolfspeed 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 Wolfspeed 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.