Correlation Between Mullen Automotive and Nio
Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and Nio 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 Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and Nio Class A, you can compare the effects of market volatilities on Mullen Automotive and Nio 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 Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and Nio.
Diversification Opportunities for Mullen Automotive and Nio
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mullen and Nio is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Nio go up and down completely randomly.
Pair Corralation between Mullen Automotive and Nio
Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the Nio. In addition to that, Mullen Automotive is 2.64 times more volatile than Nio Class A. It trades about -0.15 of its total potential returns per unit of risk. Nio Class A is currently generating about -0.02 per unit of volatility. If you would invest 464.00 in Nio Class A on January 29, 2024 and sell it today you would lose (15.00) from holding Nio Class A or give up 3.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mullen Automotive vs. Nio Class A
Performance |
Timeline |
Mullen Automotive |
Nio Class A |
Mullen Automotive and Nio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mullen Automotive and Nio
The main advantage of trading using opposite Mullen Automotive and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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