Correlation Between Amazon CDR and Mullen

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

By analyzing existing cross correlation between Amazon CDR and Mullen Group, you can compare the effects of market volatilities on Amazon CDR and Mullen 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 Amazon CDR with a short position of Mullen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Mullen.

Diversification Opportunities for Amazon CDR and Mullen

0.8

Correlation Coefficient

Amazon CDR  Mullen

Very poor diversification

The 3 months correlation between Amazon and Mullen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Amazon CDR 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 Amazon CDR are associated (or correlated) with Mullen. 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 Amazon CDR i.e., Amazon CDR and Mullen go up and down completely randomly.

Pair Corralation between Amazon CDR and Mullen

Assuming the 90 days trading horizon Amazon CDR is expected to under-perform the Mullen. In addition to that, Amazon CDR is 1.2 times more volatile than Mullen Group. It trades about -0.12 of its total potential returns per unit of risk. Mullen Group is currently generating about -0.12 per unit of volatility. If you would invest  1,429  in Mullen Group on December 30, 2024 and sell it today you would lose (161.00) from holding Mullen Group or give up 11.27% of portfolio value over 90 days.

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

Amazon CDR  vs.  Mullen Group

Amazon CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mullen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mullen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Amazon CDR and Mullen

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

The idea behind Amazon CDR and Mullen Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.