Correlation Between Kubota and Nikola Corp

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Can any of the company-specific risk be diversified away by investing in both Kubota 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 Kubota and Nikola Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kubota and Nikola Corp, you can compare the effects of market volatilities on Kubota 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 Kubota with a short position of Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kubota and Nikola Corp.

Diversification Opportunities for Kubota and Nikola Corp

KubotaNikolaDiversified AwayKubotaNikolaDiversified Away100%
0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Kubota and Nikola is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kubota and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Kubota 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 Kubota 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 Kubota i.e., Kubota and Nikola Corp go up and down completely randomly.

Pair Corralation between Kubota and Nikola Corp

Assuming the 90 days horizon Kubota is expected to generate 0.26 times more return on investment than Nikola Corp. However, Kubota is 3.85 times less risky than Nikola Corp. It trades about -0.17 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.28 per unit of risk. If you would invest  1,450  in Kubota on September 19, 2024 and sell it today you would lose (282.00) from holding Kubota or give up 19.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

Kubota  vs.  Nikola Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -70-60-50-40-30-20-100
JavaScript chart by amCharts 3.21.15KUBTF NKLA
       Timeline  
Kubota 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kubota has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1212.51313.51414.5
Nikola Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec23456

Kubota and Nikola Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.19-2.39-1.59-0.790.01130.681.352.032.71 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15KUBTF NKLA
       Returns  

Pair Trading with Kubota and Nikola Corp

The main advantage of trading using opposite Kubota and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kubota 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 Kubota 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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