Correlation Between Nikola Corp and Daimler Truck

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

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

Diversification Opportunities for Nikola Corp and Daimler Truck

-0.8

Correlation Coefficient

Nikola Corp  Daimler Truck

Pay attention - limited upside

The 3 months correlation between Nikola and Daimler is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding and Nikola Corp 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 Nikola Corp are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Nikola Corp i.e., Nikola Corp and Daimler Truck go up and down completely randomly.

Pair Corralation between Nikola Corp and Daimler Truck

Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Daimler Truck. In addition to that, Nikola Corp is 6.06 times more volatile than Daimler Truck Holding. It trades about -0.15 of its total potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.06 per unit of volatility. 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

Nikola Corp  vs.  Daimler Truck Holding

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.

Daimler Truck Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Daimler Truck may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nikola Corp and Daimler Truck

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

The idea behind Nikola Corp and Daimler Truck Holding 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.