Correlation Between Canoo and Mullen Automotive

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

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

Diversification Opportunities for Canoo and Mullen Automotive

0.87

Correlation Coefficient

Canoo  Mullen Automotive

Very poor diversification

The 3 months correlation between Canoo and Mullen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Canoo 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 Canoo Inc 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 Canoo i.e., Canoo and Mullen Automotive go up and down completely randomly.

Pair Corralation between Canoo and Mullen Automotive

Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Mullen Automotive. But the pink sheet apears to be less risky and, when comparing its historical volatility, Canoo Inc is 4.74 times less risky than Mullen Automotive. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Mullen Automotive is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  51,750,000  in Mullen Automotive on November 19, 2024 and sell it today you would lose (51,748,818) from holding Mullen Automotive or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.78%
Values	Daily Returns

Canoo Inc  vs.  Mullen Automotive

Canoo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mullen Automotive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mullen Automotive are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Mullen Automotive displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoo and Mullen Automotive

The main advantage of trading using opposite Canoo and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo 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.

The idea behind Canoo Inc and Mullen Automotive 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.