Correlation Between Mullen Automotive and Nexteer Automotive
Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and Nexteer 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 Mullen Automotive and Nexteer Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and Nexteer Automotive Group, you can compare the effects of market volatilities on Mullen Automotive and Nexteer 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 Mullen Automotive with a short position of Nexteer Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and Nexteer Automotive.
Diversification Opportunities for Mullen Automotive and Nexteer Automotive
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mullen and Nexteer is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Nexteer Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexteer Automotive 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 Nexteer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexteer Automotive has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Nexteer Automotive go up and down completely randomly.
Pair Corralation between Mullen Automotive and Nexteer Automotive
Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the Nexteer Automotive. In addition to that, Mullen Automotive is 5.97 times more volatile than Nexteer Automotive Group. It trades about -0.16 of its total potential returns per unit of risk. Nexteer Automotive Group is currently generating about 0.12 per unit of volatility. If you would invest 33.00 in Nexteer Automotive Group on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Nexteer Automotive Group or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mullen Automotive vs. Nexteer Automotive Group
Performance |
| Timeline |
| Mullen Automotive |
| Nexteer Automotive |
Mullen Automotive and Nexteer Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mullen Automotive and Nexteer Automotive
The main advantage of trading using opposite Mullen Automotive and Nexteer Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, Nexteer 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 Nexteer Automotive will offset losses from the drop in Nexteer Automotive's long position.| Mullen Automotive vs. Hycroft Mining Holding | Mullen Automotive vs. Imperial Petroleum | Mullen Automotive vs. Camber Energy |
| Nexteer Automotive vs. Adient PLC | Nexteer Automotive vs. Holley Inc | Nexteer Automotive vs. ECARX Holdings Class | Nexteer Automotive vs. Autoliv |
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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