Correlation Between NikolaCorp and Fisker

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

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

Diversification Opportunities for NikolaCorp and Fisker

-0.39

Correlation Coefficient

NikolaCorp  Fisker

Very good diversification

The 3 months correlation between NikolaCorp and Fisker is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NikolaCorp and Fisker Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisker Inc and NikolaCorp 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 NikolaCorp are associated (or correlated) with Fisker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisker Inc has no effect on the direction of NikolaCorp i.e., NikolaCorp and Fisker go up and down completely randomly.

Pair Corralation between NikolaCorp and Fisker

Given the investment horizon of 90 days NikolaCorp is expected to generate 0.63 times more return on investment than Fisker. However, NikolaCorp is 1.59 times less risky than Fisker. It trades about -0.05 of its potential returns per unit of risk. Fisker Inc is currently generating about -0.26 per unit of risk. If you would invest  227.00  in NikolaCorp on January 24, 2024 and sell it today you would lose (164.00) from holding NikolaCorp or give up 72.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.89%
Values	Daily Returns

NikolaCorp  vs.  Fisker Inc

NikolaCorp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days NikolaCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, NikolaCorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with NikolaCorp and Fisker

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

The idea behind NikolaCorp and Fisker Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.