Correlation Between GM and Mobix Labs
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Mobix Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mobix Labs, you can compare the effects of market volatilities on GM 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 GM with a short position of Mobix Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mobix Labs.
Diversification Opportunities for GM and Mobix Labs
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Mobix is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs and GM 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 General Motors 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 GM i.e., GM and Mobix Labs go up and down completely randomly.
Pair Corralation between GM and Mobix Labs
Allowing for the 90-day total investment horizon GM is expected to generate 11.0 times less return on investment than Mobix Labs. But when comparing it to its historical volatility, General Motors is 4.57 times less risky than Mobix Labs. It trades about 0.16 of its potential returns per unit of risk. Mobix Labs is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Mobix Labs on September 2, 2024 and sell it today you would earn a total of 90.00 from holding Mobix Labs or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mobix Labs
Performance |
| Timeline |
| General Motors |
| Mobix Labs |
GM and Mobix Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mobix Labs
The main advantage of trading using opposite GM and Mobix Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.| Mobix Labs vs. Tower Semiconductor | Mobix Labs vs. Corporacion America Airports | Mobix Labs vs. Porvair plc | Mobix Labs vs. Globalfoundries |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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