Correlation Between Mullen Automotive and US Metro

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Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and US Metro 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 US Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and US Metro Bancorp, you can compare the effects of market volatilities on Mullen Automotive and US Metro 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 US Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and US Metro.

Diversification Opportunities for Mullen Automotive and US Metro

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Mullen and USMT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and US Metro Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Metro Bancorp 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 US Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Metro Bancorp has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and US Metro go up and down completely randomly.

Pair Corralation between Mullen Automotive and US Metro

If you would invest  385.00  in US Metro Bancorp on August 28, 2024 and sell it today you would earn a total of  0.00  from holding US Metro Bancorp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy12.5%
ValuesDaily Returns

Mullen Automotive  vs.  US Metro Bancorp

 Performance 
       Timeline  
Mullen Automotive 

Risk-Adjusted Performance

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Over the last 90 days Mullen Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
US Metro Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days US Metro Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, US Metro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mullen Automotive and US Metro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mullen Automotive and US Metro

The main advantage of trading using opposite Mullen Automotive and US Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, US Metro 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 US Metro will offset losses from the drop in US Metro's long position.
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The idea behind Mullen Automotive and US Metro Bancorp 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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