Correlation Between Nikola Corp and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Lion Electric 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 Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Lion Electric Corp, you can compare the effects of market volatilities on Nikola Corp and Lion Electric 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 Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Lion Electric.
Diversification Opportunities for Nikola Corp and Lion Electric
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nikola and Lion is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp 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 Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Nikola Corp i.e., Nikola Corp and Lion Electric go up and down completely randomly.
Pair Corralation between Nikola Corp and Lion Electric
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Lion Electric. In addition to that, Nikola Corp is 1.59 times more volatile than Lion Electric Corp. It trades about -0.06 of its total potential returns per unit of risk. Lion Electric Corp is currently generating about -0.08 per unit of volatility. If you would invest 302.00 in Lion Electric Corp on August 24, 2024 and sell it today you would lose (278.00) from holding Lion Electric Corp or give up 92.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. Lion Electric Corp
Performance |
| Timeline |
| Nikola Corp |
| Lion Electric Corp |
Nikola Corp and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Lion Electric
The main advantage of trading using opposite Nikola Corp and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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