Correlation Between Mullen Automotive and IMPACT Silver

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

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

Diversification Opportunities for Mullen Automotive and IMPACT Silver

0.76

Correlation Coefficient

Mullen Automotive  IMPACT Silver

Poor diversification

The 3 months correlation between Mullen and IMPACT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive and IMPACT Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPACT Silver Corp 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 IMPACT Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPACT Silver Corp has no effect on the direction of Mullen Automotive i.e., Mullen Automotive and IMPACT Silver go up and down completely randomly.

Pair Corralation between Mullen Automotive and IMPACT Silver

Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the IMPACT Silver. In addition to that, Mullen Automotive is 2.61 times more volatile than IMPACT Silver Corp. It trades about -0.54 of its total potential returns per unit of risk. IMPACT Silver Corp is currently generating about -0.08 per unit of volatility. If you would invest  17.00  in IMPACT Silver Corp on November 28, 2024 and sell it today you would lose (4.00) from holding IMPACT Silver Corp or give up 23.53% of portfolio value over 90 days.

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

Mullen Automotive  vs.  IMPACT Silver Corp

Mullen Automotive

Risk-Adjusted Performance

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

IMPACT Silver Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days IMPACT Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mullen Automotive and IMPACT Silver

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

The idea behind Mullen Automotive and IMPACT Silver Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.