Correlation Between Wabash National and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both Wabash National and Nikola Corp 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 Wabash National and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Nikola Corp, you can compare the effects of market volatilities on Wabash National and Nikola Corp 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 Wabash National with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Nikola Corp.
Diversification Opportunities for Wabash National and Nikola Corp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wabash and Nikola is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Wabash National 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 Wabash National are associated (or correlated) with Nikola Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikola Corp has no effect on the direction of Wabash National i.e., Wabash National and Nikola Corp go up and down completely randomly.
Pair Corralation between Wabash National and Nikola Corp
Considering the 90-day investment horizon Wabash National is expected to under-perform the Nikola Corp. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 4.36 times less risky than Nikola Corp. The stock trades about -0.07 of its potential returns per unit of risk. The Nikola Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Nikola Corp on October 23, 2024 and sell it today you would earn a total of 18.00 from holding Nikola Corp or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. Nikola Corp
Performance |
| Timeline |
| Wabash National |
| Nikola Corp |
Wabash National and Nikola Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Nikola Corp
The main advantage of trading using opposite Wabash National and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Nikola Corp 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 Nikola Corp will offset losses from the drop in Nikola Corp's long position.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar | Nikola Corp vs. AGCO Corporation |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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