Correlation Between Fisker and NikolaCorp

Can any of the company-specific risk be diversified away by investing in both Fisker and NikolaCorp 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 Fisker and NikolaCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fisker Inc and NikolaCorp, you can compare the effects of market volatilities on Fisker and NikolaCorp 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 Fisker with a short position of NikolaCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisker and NikolaCorp.

Diversification Opportunities for Fisker and NikolaCorp

-0.43

Correlation Coefficient

Fisker  NikolaCorp

Very good diversification

The 3 months correlation between Fisker and NikolaCorp is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc and NikolaCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NikolaCorp and Fisker 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 Fisker Inc are associated (or correlated) with NikolaCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NikolaCorp has no effect on the direction of Fisker i.e., Fisker and NikolaCorp go up and down completely randomly.

Pair Corralation between Fisker and NikolaCorp

Considering the 90-day investment horizon Fisker Inc is expected to under-perform the NikolaCorp. In addition to that, Fisker is 4.29 times more volatile than NikolaCorp. It trades about -0.75 of its total potential returns per unit of risk. NikolaCorp is currently generating about 0.07 per unit of volatility. If you would invest  63.00  in NikolaCorp on January 20, 2024 and sell it today you would earn a total of  3.00  from holding NikolaCorp or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.36%
Values	Daily Returns

Fisker Inc  vs.  NikolaCorp

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

NikolaCorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NikolaCorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, NikolaCorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fisker and NikolaCorp

The main advantage of trading using opposite Fisker and NikolaCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisker position performs unexpectedly, NikolaCorp 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 NikolaCorp will offset losses from the drop in NikolaCorp's long position.

The idea behind Fisker Inc and NikolaCorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.