Correlation Between Mullen Automotive and Honda
Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and Honda 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 Automotive and Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and Honda Motor Co, you can compare the effects of market volatilities on Mullen Automotive and Honda 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 Automotive with a short position of Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and Honda.
Diversification Opportunities for Mullen Automotive and Honda
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mullen and Honda is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and Mullen Automotive 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 Automotive are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Honda go up and down completely randomly.
Pair Corralation between Mullen Automotive and Honda
Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the Honda. In addition to that, Mullen Automotive is 8.71 times more volatile than Honda Motor Co. It trades about -0.13 of its total potential returns per unit of risk. Honda Motor Co is currently generating about 0.03 per unit of volatility. If you would invest 2,290 in Honda Motor Co on August 28, 2024 and sell it today you would earn a total of 377.00 from holding Honda Motor Co or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mullen Automotive vs. Honda Motor Co
Performance |
| Timeline |
| Mullen Automotive |
| Honda Motor |
Mullen Automotive and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mullen Automotive and Honda
The main advantage of trading using opposite Mullen Automotive and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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