Correlation Between Crane and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both Crane 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 Crane and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Nikola Corp, you can compare the effects of market volatilities on Crane 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 Crane with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Nikola Corp.
Diversification Opportunities for Crane and Nikola Corp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Crane and Nikola is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Crane 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 Crane Company 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 Crane i.e., Crane and Nikola Corp go up and down completely randomly.
Pair Corralation between Crane and Nikola Corp
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.14 times more return on investment than Nikola Corp. However, Crane Company is 7.03 times less risky than Nikola Corp. It trades about 0.03 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.15 per unit of risk. If you would invest 15,197 in Crane Company on December 28, 2024 and sell it today you would earn a total of 394.00 from holding Crane Company or generate 2.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Crane Company vs. Nikola Corp
Performance |
Timeline |
Crane Company |
Nikola Corp |
Crane and Nikola Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Crane and Nikola Corp
The main advantage of trading using opposite Crane and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane 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.Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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