Correlation Between Nikola Corp and Alamo
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Alamo 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 Nikola Corp and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Alamo Group, you can compare the effects of market volatilities on Nikola Corp and Alamo 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 Nikola Corp with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Alamo.
Diversification Opportunities for Nikola Corp and Alamo
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nikola and Alamo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Nikola Corp 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 Nikola Corp are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Nikola Corp i.e., Nikola Corp and Alamo go up and down completely randomly.
Pair Corralation between Nikola Corp and Alamo
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Alamo. In addition to that, Nikola Corp is 3.7 times more volatile than Alamo Group. It trades about -0.16 of its total potential returns per unit of risk. Alamo Group is currently generating about -0.02 per unit of volatility. If you would invest 21,458 in Alamo Group on November 3, 2024 and sell it today you would lose (2,902) from holding Alamo Group or give up 13.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. Alamo Group
Performance |
| Timeline |
| Nikola Corp |
| Alamo Group |
Nikola Corp and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Alamo
The main advantage of trading using opposite Nikola Corp and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar | Nikola Corp vs. AGCO Corporation |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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