Correlation Between Nikola Corp and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and AmeraMex International 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 AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and AmeraMex International, you can compare the effects of market volatilities on Nikola Corp and AmeraMex International 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 AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and AmeraMex International.
Diversification Opportunities for Nikola Corp and AmeraMex International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nikola and AmeraMex is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International 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 AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of Nikola Corp i.e., Nikola Corp and AmeraMex International go up and down completely randomly.
Pair Corralation between Nikola Corp and AmeraMex International
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the AmeraMex International. But the stock apears to be less risky and, when comparing its historical volatility, Nikola Corp is 2.24 times less risky than AmeraMex International. The stock trades about -0.2 of its potential returns per unit of risk. The AmeraMex International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in AmeraMex International on August 28, 2024 and sell it today you would earn a total of 10.00 from holding AmeraMex International or generate 90.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. AmeraMex International
Performance |
| Timeline |
| Nikola Corp |
| AmeraMex International |
Nikola Corp and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and AmeraMex International
The main advantage of trading using opposite Nikola Corp and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, AmeraMex International 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 AmeraMex International will offset losses from the drop in AmeraMex International's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
| AmeraMex International vs. Lion Electric Corp | AmeraMex International vs. Nikola Corp | AmeraMex International vs. Buhler Industries | AmeraMex International vs. Toyota Industries |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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