Correlation Between Mullen Automotive and Lucid
Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and Lucid 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 Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and Lucid Group, you can compare the effects of market volatilities on Mullen Automotive and Lucid 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 Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and Lucid.
Diversification Opportunities for Mullen Automotive and Lucid
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mullen and Lucid is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Lucid go up and down completely randomly.
Pair Corralation between Mullen Automotive and Lucid
Given the investment horizon of 90 days Mullen Automotive is expected to generate 4.92 times more return on investment than Lucid. However, Mullen Automotive is 4.92 times more volatile than Lucid Group. It trades about 0.11 of its potential returns per unit of risk. Lucid Group is currently generating about -0.2 per unit of risk. If you would invest 253.00 in Mullen Automotive on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Mullen Automotive or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mullen Automotive vs. Lucid Group
Performance |
| Timeline |
| Mullen Automotive |
| Lucid Group |
Mullen Automotive and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mullen Automotive and Lucid
The main advantage of trading using opposite Mullen Automotive and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid'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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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