Correlation Between Nikola Corp and Epiroc AB
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Epiroc AB 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 Epiroc AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Epiroc AB, you can compare the effects of market volatilities on Nikola Corp and Epiroc AB 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 Epiroc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Epiroc AB.
Diversification Opportunities for Nikola Corp and Epiroc AB
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nikola and Epiroc is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Epiroc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epiroc AB 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 Epiroc AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epiroc AB has no effect on the direction of Nikola Corp i.e., Nikola Corp and Epiroc AB go up and down completely randomly.
Pair Corralation between Nikola Corp and Epiroc AB
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Epiroc AB. In addition to that, Nikola Corp is 4.08 times more volatile than Epiroc AB. It trades about -0.06 of its total potential returns per unit of risk. Epiroc AB is currently generating about 0.0 per unit of volatility. If you would invest 1,947 in Epiroc AB on September 3, 2024 and sell it today you would lose (99.00) from holding Epiroc AB or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. Epiroc AB
Performance |
| Timeline |
| Nikola Corp |
| Epiroc AB |
Nikola Corp and Epiroc AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Epiroc AB
The main advantage of trading using opposite Nikola Corp and Epiroc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Epiroc AB 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 Epiroc AB will offset losses from the drop in Epiroc AB's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
| Epiroc AB vs. Caterpillar | Epiroc AB vs. AGCO Corporation | Epiroc AB vs. Nikola Corp | Epiroc AB vs. PACCAR Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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