Correlation Between Nikola Corp and Urban Gro
Can any of the company-specific risk be diversified away by investing in both Nikola Corp and Urban Gro 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 Urban Gro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nikola Corp and Urban Gro, you can compare the effects of market volatilities on Nikola Corp and Urban Gro 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 Urban Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nikola Corp and Urban Gro.
Diversification Opportunities for Nikola Corp and Urban Gro
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nikola and Urban is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Urban Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Gro 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 Urban Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Gro has no effect on the direction of Nikola Corp i.e., Nikola Corp and Urban Gro go up and down completely randomly.
Pair Corralation between Nikola Corp and Urban Gro
Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Urban Gro. In addition to that, Nikola Corp is 1.16 times more volatile than Urban Gro. It trades about -0.55 of its total potential returns per unit of risk. Urban Gro is currently generating about -0.05 per unit of volatility. If you would invest 165.00 in Urban Gro on August 28, 2024 and sell it today you would lose (17.00) from holding Urban Gro or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nikola Corp vs. Urban Gro
Performance |
| Timeline |
| Nikola Corp |
| Urban Gro |
Nikola Corp and Urban Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nikola Corp and Urban Gro
The main advantage of trading using opposite Nikola Corp and Urban Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nikola Corp position performs unexpectedly, Urban Gro 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 Urban Gro will offset losses from the drop in Urban Gro's long position.| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
| Urban Gro vs. Nikola Corp | Urban Gro vs. Wabash National | Urban Gro vs. American Premium Water | Urban Gro vs. Titan International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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