Correlation Between Nikola Corp and Rev
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Rev 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 Rev into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Rev Group, you can compare the effects of market volatilities on Nikola Corp and Rev 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 Rev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Rev.
Diversification Opportunities for Nikola Corp and Rev
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nikola and Rev is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group 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 Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Nikola Corp i.e., Nikola Corp and Rev go up and down completely randomly.
Pair Corralation between Nikola Corp and Rev
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Rev. In addition to that, Nikola Corp is 3.0 times more volatile than Rev Group. It trades about -0.06 of its total potential returns per unit of risk. Rev Group is currently generating about 0.1 per unit of volatility. If you would invest 1,122 in Rev Group on September 3, 2024 and sell it today you would earn a total of 1,980 from holding Rev Group or generate 176.47% 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. Rev Group
Performance |
| Timeline |
| Nikola Corp |
| Rev Group |
Nikola Corp and Rev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Rev
The main advantage of trading using opposite Nikola Corp and Rev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Rev 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 Rev will offset losses from the drop in Rev's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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