Correlation Between NWTN and Mullen Automotive
Can any of the company-specific risk be diversified away by investing in both NWTN and Mullen 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 NWTN and Mullen Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NWTN Class B and Mullen Automotive, you can compare the effects of market volatilities on NWTN and Mullen 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 NWTN with a short position of Mullen Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWTN and Mullen Automotive.
Diversification Opportunities for NWTN and Mullen Automotive
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NWTN and Mullen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Class B and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and NWTN 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 NWTN Class B are associated (or correlated) with Mullen Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Automotive has no effect on the direction of NWTN i.e., NWTN and Mullen Automotive go up and down completely randomly.
Pair Corralation between NWTN and Mullen Automotive
Given the investment horizon of 90 days NWTN Class B is expected to generate 0.82 times more return on investment than Mullen Automotive. However, NWTN Class B is 1.21 times less risky than Mullen Automotive. It trades about -0.04 of its potential returns per unit of risk. Mullen Automotive is currently generating about -0.2 per unit of risk. If you would invest 640.00 in NWTN Class B on November 9, 2024 and sell it today you would lose (575.00) from holding NWTN Class B or give up 89.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NWTN Class B vs. Mullen Automotive
Performance |
| Timeline |
| NWTN Class B |
| Mullen Automotive |
NWTN and Mullen Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NWTN and Mullen Automotive
The main advantage of trading using opposite NWTN and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN position performs unexpectedly, Mullen 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 Mullen Automotive will offset losses from the drop in Mullen Automotive's long position.The idea behind NWTN Class B and Mullen Automotive 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.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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