Correlation Between Mullen Group and Pacific West

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

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

Diversification Opportunities for Mullen Group and Pacific West

0.09

Correlation Coefficient

Mullen Group  Pacific West

Significant diversification

The 3 months correlation between Mullen and Pacific is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Group and Pacific West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific West Bancorp and Mullen Group 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 Group are associated (or correlated) with Pacific West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific West Bancorp has no effect on the direction of Mullen Group i.e., Mullen Group and Pacific West go up and down completely randomly.

Pair Corralation between Mullen Group and Pacific West

Assuming the 90 days horizon Mullen Group is expected to generate 8.55 times less return on investment than Pacific West. But when comparing it to its historical volatility, Mullen Group is 1.15 times less risky than Pacific West. It trades about 0.02 of its potential returns per unit of risk. Pacific West Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  995.00  in Pacific West Bancorp on May 6, 2025 and sell it today you would earn a total of  130.00  from holding Pacific West Bancorp or generate 13.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Mullen Group  vs.  Pacific West Bancorp

Mullen Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mullen Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mullen Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pacific West Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific West Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Pacific West disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mullen Group and Pacific West

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

The idea behind Mullen Group and Pacific West Bancorp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.