Correlation Between Mullen Automotive and Hycroft Mining

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

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

Diversification Opportunities for Mullen Automotive and Hycroft Mining

-0.53

Correlation Coefficient

Mullen Automotive  Hycroft Mining

Excellent diversification

The 3 months correlation between Mullen and Hycroft is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding 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 Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and Hycroft Mining go up and down completely randomly.

Pair Corralation between Mullen Automotive and Hycroft Mining

Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the Hycroft Mining. In addition to that, Mullen Automotive is 3.33 times more volatile than Hycroft Mining Holding. It trades about -0.17 of its total potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.06 per unit of volatility. If you would invest  210.00  in Hycroft Mining Holding on August 30, 2024 and sell it today you would earn a total of  23.00  from holding Hycroft Mining Holding or generate 10.95% return on investment over 90 days.

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

Mullen Automotive  vs.  Hycroft Mining Holding

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hycroft Mining Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Hycroft Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mullen Automotive and Hycroft Mining

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

The idea behind Mullen Automotive and Hycroft Mining Holding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.