Correlation Between Nio and Mullen Automotive
Can any of the company-specific risk be diversified away by investing in both Nio 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 Nio and Mullen Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Mullen Automotive, you can compare the effects of market volatilities on Nio 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 Nio with a short position of Mullen Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Mullen Automotive.
Diversification Opportunities for Nio and Mullen Automotive
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nio and Mullen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Nio 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 Nio Class A 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 Nio i.e., Nio and Mullen Automotive go up and down completely randomly.
Pair Corralation between Nio and Mullen Automotive
Considering the 90-day investment horizon Nio is expected to generate 1.59 times less return on investment than Mullen Automotive. But when comparing it to its historical volatility, Nio Class A is 4.39 times less risky than Mullen Automotive. It trades about 0.22 of its potential returns per unit of risk. Mullen Automotive is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 408.00 in Mullen Automotive on February 4, 2024 and sell it today you would earn a total of 9.00 from holding Mullen Automotive or generate 2.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nio Class A vs. Mullen Automotive
Performance |
Timeline |
Nio Class A |
Mullen Automotive |
Nio and Mullen Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nio and Mullen Automotive
The main advantage of trading using opposite Nio and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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.Nio vs. Hycroft Mining Holding | Nio vs. Imperial Petroleum | Nio vs. Exela Technologies | Nio vs. Camber Energy |
Mullen Automotive vs. Hycroft Mining Holding | Mullen Automotive vs. Imperial Petroleum | Mullen Automotive vs. Exela Technologies | 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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