Correlation Between Lucid and Mullen Automotive
Can any of the company-specific risk be diversified away by investing in both Lucid and Mullen Automotive 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 Lucid and Mullen Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Mullen Automotive, you can compare the effects of market volatilities on Lucid and Mullen Automotive 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 Lucid with a short position of Mullen Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Mullen Automotive.
Diversification Opportunities for Lucid and Mullen Automotive
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lucid and Mullen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Lucid 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 Lucid Group are associated (or correlated) with Mullen Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Automotive has no effect on the direction of Lucid i.e., Lucid and Mullen Automotive go up and down completely randomly.
Pair Corralation between Lucid and Mullen Automotive
Given the investment horizon of 90 days Lucid Group is expected to generate 0.41 times more return on investment than Mullen Automotive. However, Lucid Group is 2.42 times less risky than Mullen Automotive. It trades about -0.02 of its potential returns per unit of risk. Mullen Automotive is currently generating about -0.26 per unit of risk. If you would invest 274.00 in Lucid Group on August 24, 2024 and sell it today you would lose (68.00) from holding Lucid Group or give up 24.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Mullen Automotive
Performance |
| Timeline |
| Lucid Group |
| Mullen Automotive |
Lucid and Mullen Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Mullen Automotive
The main advantage of trading using opposite Lucid and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Mullen Automotive 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 Mullen Automotive will offset losses from the drop in Mullen Automotive's long position.The idea behind Lucid Group and Mullen Automotive 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.| Mullen Automotive vs. Hycroft Mining Holding | Mullen Automotive vs. Imperial Petroleum | Mullen Automotive vs. Camber Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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