Correlation Between Daimler Truck and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both Daimler Truck 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 Daimler Truck and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daimler Truck Holding and Nikola Corp, you can compare the effects of market volatilities on Daimler Truck 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 Daimler Truck with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Nikola Corp.
Diversification Opportunities for Daimler Truck and Nikola Corp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daimler and Nikola is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Daimler Truck 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 Daimler Truck Holding 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 Daimler Truck i.e., Daimler Truck and Nikola Corp go up and down completely randomly.
Pair Corralation between Daimler Truck and Nikola Corp
Assuming the 90 days horizon Daimler Truck Holding is expected to generate 0.16 times more return on investment than Nikola Corp. However, Daimler Truck Holding is 6.06 times less risky than Nikola Corp. It trades about 0.06 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.15 per unit of risk. If you would invest 1,907 in Daimler Truck Holding on December 28, 2024 and sell it today you would earn a total of 150.00 from holding Daimler Truck Holding or generate 7.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.36% |
Values | Daily Returns |
Daimler Truck Holding vs. Nikola Corp
Performance |
Timeline |
Daimler Truck Holding |
Nikola Corp |
Daimler Truck and Nikola Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daimler Truck and Nikola Corp
The main advantage of trading using opposite Daimler Truck and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daimler Truck 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.Daimler Truck vs. Volvo AB ADR | Daimler Truck vs. Deere Company | Daimler Truck vs. Volvo AB ser | Daimler Truck vs. Oshkosh |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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