Correlation Between AltShares Trust and Mullen Automotive

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

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

Diversification Opportunities for AltShares Trust and Mullen Automotive

-0.65

Correlation Coefficient

AltShares Trust  Mullen Automotive

Excellent diversification

The 3 months correlation between AltShares and Mullen is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AltShares Trust and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and AltShares Trust 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 AltShares Trust 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 AltShares Trust i.e., AltShares Trust and Mullen Automotive go up and down completely randomly.

Pair Corralation between AltShares Trust and Mullen Automotive

Considering the 90-day investment horizon AltShares Trust is expected to generate 306.45 times less return on investment than Mullen Automotive. But when comparing it to its historical volatility, AltShares Trust is 848.47 times less risky than Mullen Automotive. It trades about 0.22 of its potential returns per unit of risk. Mullen Automotive is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Mullen Automotive on May 6, 2025 and sell it today you would lose (1,932) from holding Mullen Automotive or give up 69.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

AltShares Trust   vs.  Mullen Automotive

AltShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AltShares Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AltShares Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Mullen Automotive

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mullen Automotive are ranked lower than 6 (%) 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 AltShares Trust and Mullen Automotive

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

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.