Correlation Between Nikola Corp and Ideanomics
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Ideanomics 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 Ideanomics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Ideanomics, you can compare the effects of market volatilities on Nikola Corp and Ideanomics 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 Ideanomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Ideanomics.
Diversification Opportunities for Nikola Corp and Ideanomics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nikola and Ideanomics is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics 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 Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Nikola Corp i.e., Nikola Corp and Ideanomics go up and down completely randomly.
Pair Corralation between Nikola Corp and Ideanomics
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Ideanomics. But the stock apears to be less risky and, when comparing its historical volatility, Nikola Corp is 18.38 times less risky than Ideanomics. The stock trades about -0.16 of its potential returns per unit of risk. The Ideanomics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Ideanomics on November 3, 2024 and sell it today you would lose (92.00) from holding Ideanomics or give up 98.92% 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. Ideanomics
Performance |
| Timeline |
| Nikola Corp |
| Ideanomics |
Nikola Corp and Ideanomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Ideanomics
The main advantage of trading using opposite Nikola Corp and Ideanomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Ideanomics 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 Ideanomics will offset losses from the drop in Ideanomics' long position.| Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar | Nikola Corp vs. AGCO Corporation |
| Ideanomics vs. Deere Company | Ideanomics vs. Caterpillar | Ideanomics vs. Xos Inc | Ideanomics vs. Nikola Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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