Correlation Between Nikola Corp and Columbus McKinnon
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Columbus McKinnon 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 Columbus McKinnon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Columbus McKinnon, you can compare the effects of market volatilities on Nikola Corp and Columbus McKinnon 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 Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Columbus McKinnon.
Diversification Opportunities for Nikola Corp and Columbus McKinnon
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nikola and Columbus is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon 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 Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Nikola Corp i.e., Nikola Corp and Columbus McKinnon go up and down completely randomly.
Pair Corralation between Nikola Corp and Columbus McKinnon
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Columbus McKinnon. In addition to that, Nikola Corp is 3.94 times more volatile than Columbus McKinnon. It trades about -0.06 of its total potential returns per unit of risk. Columbus McKinnon is currently generating about 0.03 per unit of volatility. If you would invest 3,125 in Columbus McKinnon on August 27, 2024 and sell it today you would earn a total of 728.00 from holding Columbus McKinnon or generate 23.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. Columbus McKinnon
Performance |
| Timeline |
| Nikola Corp |
| Columbus McKinnon |
Nikola Corp and Columbus McKinnon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Columbus McKinnon
The main advantage of trading using opposite Nikola Corp and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Columbus McKinnon 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 Columbus McKinnon will offset losses from the drop in Columbus McKinnon's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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