Correlation Between Arts Way and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both Arts Way 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 Arts Way and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arts Way Manufacturing Co and Nikola Corp, you can compare the effects of market volatilities on Arts Way 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 Arts Way with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and Nikola Corp.
Diversification Opportunities for Arts Way and Nikola Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arts and Nikola is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Arts Way 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 Arts Way Manufacturing Co 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 Arts Way i.e., Arts Way and Nikola Corp go up and down completely randomly.
Pair Corralation between Arts Way and Nikola Corp
Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to generate 5.93 times more return on investment than Nikola Corp. However, Arts Way is 5.93 times more volatile than Nikola Corp. It trades about 0.04 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.06 per unit of risk. If you would invest 197.00 in Arts Way Manufacturing Co on August 28, 2024 and sell it today you would lose (30.00) from holding Arts Way Manufacturing Co or give up 15.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arts Way Manufacturing Co vs. Nikola Corp
Performance |
| Timeline |
| Arts Way Manufacturing |
| Nikola Corp |
Arts Way and Nikola Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arts Way and Nikola Corp
The main advantage of trading using opposite Arts Way and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arts Way 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.| Arts Way vs. First Tractor | Arts Way vs. Ag Growth International | Arts Way vs. AmeraMex International | Arts Way vs. American Premium Water |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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