Correlation Between Lordstown Motors and Nio
Can any of the company-specific risk be diversified away by investing in both Lordstown Motors and Nio 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 Lordstown Motors and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lordstown Motors Corp and Nio Class A, you can compare the effects of market volatilities on Lordstown Motors and Nio 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 Lordstown Motors with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lordstown Motors and Nio.
Diversification Opportunities for Lordstown Motors and Nio
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lordstown and Nio is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lordstown Motors Corp and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Lordstown Motors 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 Lordstown Motors Corp are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Lordstown Motors i.e., Lordstown Motors and Nio go up and down completely randomly.
Pair Corralation between Lordstown Motors and Nio
If you would invest 490.00 in Nio Class A on August 24, 2024 and sell it today you would lose (20.00) from holding Nio Class A or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Lordstown Motors Corp vs. Nio Class A
Performance |
| Timeline |
| Lordstown Motors Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nio Class A |
Lordstown Motors and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lordstown Motors and Nio
The main advantage of trading using opposite Lordstown Motors and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lordstown Motors position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| Lordstown Motors vs. Workhorse Group | Lordstown Motors vs. Canoo Inc | Lordstown Motors vs. Hyliion Holdings Corp | Lordstown Motors vs. Blink Charging Co |
| Nio vs. Lucid Group | Nio vs. Rivian Automotive | Nio vs. Polestar Automotive Holding | Nio vs. Mullen Automotive |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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