Correlation Between Worksport and Mullen Automotive

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

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

Diversification Opportunities for Worksport and Mullen Automotive

0.6

Correlation Coefficient

Worksport  Mullen Automotive

Poor diversification

The 3 months correlation between Worksport and Mullen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Worksport and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Worksport 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 Worksport 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 Worksport i.e., Worksport and Mullen Automotive go up and down completely randomly.

Pair Corralation between Worksport and Mullen Automotive

Given the investment horizon of 90 days Worksport is expected to generate 0.44 times more return on investment than Mullen Automotive. However, Worksport is 2.25 times less risky than Mullen Automotive. It trades about -0.15 of its potential returns per unit of risk. Mullen Automotive is currently generating about -0.44 per unit of risk. If you would invest  835.00  in Worksport on December 20, 2024 and sell it today you would lose (468.00) from holding Worksport or give up 56.05% of portfolio value over 90 days.

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

Worksport  vs.  Mullen Automotive

Worksport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worksport 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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

Pair Trading with Worksport and Mullen Automotive

The main advantage of trading using opposite Worksport and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worksport 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 Worksport 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.