Correlation Between Santa Cruz and Mullen Group
Can any of the company-specific risk be diversified away by investing in both Santa Cruz and Mullen Group 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 Santa Cruz and Mullen Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santa Cruz County and Mullen Group, you can compare the effects of market volatilities on Santa Cruz and Mullen Group 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 Santa Cruz with a short position of Mullen Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santa Cruz and Mullen Group.
Diversification Opportunities for Santa Cruz and Mullen Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santa and Mullen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Santa Cruz County and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Santa Cruz 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 Santa Cruz County are associated (or correlated) with Mullen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Santa Cruz i.e., Santa Cruz and Mullen Group go up and down completely randomly.
Pair Corralation between Santa Cruz and Mullen Group
Given the investment horizon of 90 days Santa Cruz County is expected to generate 0.43 times more return on investment than Mullen Group. However, Santa Cruz County is 2.33 times less risky than Mullen Group. It trades about 0.08 of its potential returns per unit of risk. Mullen Group is currently generating about 0.02 per unit of risk. If you would invest 2,396 in Santa Cruz County on September 2, 2024 and sell it today you would earn a total of 1,754 from holding Santa Cruz County or generate 73.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.7% |
| Values | Daily Returns |
Santa Cruz County vs. Mullen Group
Performance |
| Timeline |
| Santa Cruz County |
| Mullen Group |
Santa Cruz and Mullen Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santa Cruz and Mullen Group
The main advantage of trading using opposite Santa Cruz and Mullen Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santa Cruz position performs unexpectedly, Mullen Group 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 Group will offset losses from the drop in Mullen Group's long position.| Santa Cruz vs. Harbor Bankshares | Santa Cruz vs. Liberty Northwest Bancorp | Santa Cruz vs. Pioneer Bankcorp | Santa Cruz vs. Summit Bancshares |
| Mullen Group vs. ArcBest Corp | Mullen Group vs. Old Dominion Freight | Mullen Group vs. Saia Inc | Mullen Group vs. XPO Logistics |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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