Correlation Between AGCO and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both AGCO and Nikola Corp 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 AGCO and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and Nikola Corp, you can compare the effects of market volatilities on AGCO and Nikola Corp 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 AGCO with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Nikola Corp.
Diversification Opportunities for AGCO and Nikola Corp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGCO and Nikola is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and AGCO 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 AGCO Corporation are associated (or correlated) with Nikola Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikola Corp has no effect on the direction of AGCO i.e., AGCO and Nikola Corp go up and down completely randomly.
Pair Corralation between AGCO and Nikola Corp
Given the investment horizon of 90 days AGCO Corporation is expected to generate 0.3 times more return on investment than Nikola Corp. However, AGCO Corporation is 3.32 times less risky than Nikola Corp. It trades about -0.02 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.32 per unit of risk. If you would invest 9,929 in AGCO Corporation on August 24, 2024 and sell it today you would lose (184.00) from holding AGCO Corporation or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AGCO Corp. vs. Nikola Corp
Performance |
| Timeline |
| AGCO |
| Nikola Corp |
AGCO and Nikola Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGCO and Nikola Corp
The main advantage of trading using opposite AGCO and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO position performs unexpectedly, Nikola Corp 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 Nikola Corp will offset losses from the drop in Nikola Corp's long position.The idea behind AGCO Corporation and Nikola 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.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |