Correlation Between Westport Fuel and Mobileye Global

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

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

Diversification Opportunities for Westport Fuel and Mobileye Global

0.31

Correlation Coefficient

Westport Fuel  Mobileye Global

Weak diversification

The 3 months correlation between Westport and Mobileye is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems 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 Westport Fuel 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 Westport Fuel Systems 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 Westport Fuel i.e., Westport Fuel and Mobileye Global go up and down completely randomly.

Pair Corralation between Westport Fuel and Mobileye Global

Given the investment horizon of 90 days Westport Fuel Systems is expected to under-perform the Mobileye Global. But the stock apears to be less risky and, when comparing its historical volatility, Westport Fuel Systems is 1.24 times less risky than Mobileye Global. The stock trades about -0.39 of its potential returns per unit of risk. The Mobileye Global Class is currently generating about -0.19 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Westport Fuel Systems  vs.  Mobileye Global Class

Westport Fuel Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westport Fuel Systems 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 weak essential indicators, Mobileye Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Westport Fuel and Mobileye Global

The main advantage of trading using opposite Westport Fuel and Mobileye Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel 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 Westport Fuel Systems 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.