Correlation Between Mullen and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Mullen and ECN Capital 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 Mullen and ECN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Group and ECN Capital Corp, you can compare the effects of market volatilities on Mullen and ECN Capital 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 Mullen with a short position of ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen and ECN Capital.
Diversification Opportunities for Mullen and ECN Capital
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mullen and ECN is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Group and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp and Mullen 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 Mullen Group are associated (or correlated) with ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Mullen i.e., Mullen and ECN Capital go up and down completely randomly.
Pair Corralation between Mullen and ECN Capital
Assuming the 90 days trading horizon Mullen is expected to generate 2.55 times less return on investment than ECN Capital. But when comparing it to its historical volatility, Mullen Group is 2.3 times less risky than ECN Capital. It trades about 0.02 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 264.00 in ECN Capital Corp on August 28, 2024 and sell it today you would earn a total of 27.00 from holding ECN Capital Corp or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mullen Group vs. ECN Capital Corp
Performance |
| Timeline |
| Mullen Group |
| ECN Capital Corp |
Mullen and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mullen and ECN Capital
The main advantage of trading using opposite Mullen and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital's long position.| Mullen vs. Pason Systems | Mullen vs. Westshore Terminals Investment | Mullen vs. Superior Plus Corp | Mullen vs. Gibson Energy |
| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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