Correlation Between Mullen Automotive and Ferrari NV

Can any of the company-specific risk be diversified away by investing in both Mullen Automotive and Ferrari NV 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 Ferrari NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mullen Automotive and Ferrari NV, you can compare the effects of market volatilities on Mullen Automotive and Ferrari NV 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 Ferrari NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and Ferrari NV.

Diversification Opportunities for Mullen Automotive and Ferrari NV

0.22

Correlation Coefficient

Mullen Automotive  Ferrari NV

Modest diversification

The 3 months correlation between Mullen and Ferrari is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV 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 Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Ferrari NV go up and down completely randomly.

Pair Corralation between Mullen Automotive and Ferrari NV

Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the Ferrari NV. In addition to that, Mullen Automotive is 7.97 times more volatile than Ferrari NV. It trades about -0.18 of its total potential returns per unit of risk. Ferrari NV is currently generating about -0.03 per unit of volatility. If you would invest  46,909  in Ferrari NV on September 13, 2024 and sell it today you would lose (1,724) from holding Ferrari NV or give up 3.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mullen Automotive  vs.  Ferrari NV

Mullen Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ferrari NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrari NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ferrari NV is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mullen Automotive and Ferrari NV

The main advantage of trading using opposite Mullen Automotive and Ferrari NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive position performs unexpectedly, Ferrari NV 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 Ferrari NV will offset losses from the drop in Ferrari NV's long position.

The idea behind Mullen Automotive and Ferrari NV 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..