Correlation Between Gencor Industries and Nikola Corp

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

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

Diversification Opportunities for Gencor Industries and Nikola Corp

0.92

Correlation Coefficient

Gencor Industries  Nikola Corp

Almost no diversification

The 3 months correlation between Gencor and Nikola is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Gencor Industries 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 Gencor Industries 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 Gencor Industries i.e., Gencor Industries and Nikola Corp go up and down completely randomly.

Pair Corralation between Gencor Industries and Nikola Corp

Given the investment horizon of 90 days Gencor Industries is expected to under-perform the Nikola Corp. But the stock apears to be less risky and, when comparing its historical volatility, Gencor Industries is 8.39 times less risky than Nikola Corp. The stock trades about -0.15 of its potential returns per unit of risk. The Nikola Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Nikola Corp on December 29, 2024 and sell it today you would lose (87.00) from holding Nikola Corp or give up 78.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Gencor Industries  vs.  Nikola Corp

Gencor Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gencor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nikola Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nikola Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gencor Industries and Nikola Corp

The main advantage of trading using opposite Gencor Industries and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gencor Industries 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.

The idea behind Gencor Industries and Nikola Corp 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.