Correlation Between Imperial Petroleum and Mullen Automotive

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

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

Diversification Opportunities for Imperial Petroleum and Mullen Automotive

0.53

Correlation Coefficient

Imperial Petroleum  Mullen Automotive

Very weak diversification

The 3 months correlation between Imperial and Mullen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Imperial Petroleum 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 Imperial Petroleum 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 Imperial Petroleum i.e., Imperial Petroleum and Mullen Automotive go up and down completely randomly.

Pair Corralation between Imperial Petroleum and Mullen Automotive

Given the investment horizon of 90 days Imperial Petroleum is expected to generate 0.1 times more return on investment than Mullen Automotive. However, Imperial Petroleum is 9.88 times less risky than Mullen Automotive. It trades about 0.03 of its potential returns per unit of risk. Mullen Automotive is currently generating about 0.0 per unit of risk. If you would invest  217.00  in Imperial Petroleum on November 19, 2024 and sell it today you would earn a total of  62.00  from holding Imperial Petroleum or generate 28.57% return on investment over 90 days.

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

Imperial Petroleum  vs.  Mullen Automotive

Imperial Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imperial Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 Imperial Petroleum and Mullen Automotive

The main advantage of trading using opposite Imperial Petroleum and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum 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 Imperial Petroleum 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.