Correlation Between Mobileye Global and Monro Muffler

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

Diversification Opportunities for Mobileye Global and Monro Muffler

-0.58

Correlation Coefficient

Mobileye Global  Monro Muffler

Excellent diversification

The 3 months correlation between Mobileye and Monro is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Monro Muffler Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monro Muffler Brake 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 Monro Muffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monro Muffler Brake has no effect on the direction of Mobileye Global i.e., Mobileye Global and Monro Muffler go up and down completely randomly.

Pair Corralation between Mobileye Global and Monro Muffler

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 1.05 times more return on investment than Monro Muffler. However, Mobileye Global is 1.05 times more volatile than Monro Muffler Brake. It trades about -0.19 of its potential returns per unit of risk. Monro Muffler Brake is currently generating about -0.21 per unit of risk. If you would invest  3,210  in Mobileye Global Class on January 29, 2024 and sell it today you would lose (290.00) from holding Mobileye Global Class or give up 9.03% of portfolio value over 90 days.

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

Mobileye Global Class  vs.  Monro Muffler Brake

Mobileye Global Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Monro Muffler Brake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monro Muffler Brake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mobileye Global and Monro Muffler

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

The idea behind Mobileye Global Class and Monro Muffler Brake 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.