Correlation Between Nikola Corp and Lindsay

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

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

Diversification Opportunities for Nikola Corp and Lindsay

-0.47

Correlation Coefficient

Nikola Corp  Lindsay

Very good diversification

The 3 months correlation between Nikola and Lindsay is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nikola Corp and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Nikola Corp i.e., Nikola Corp and Lindsay go up and down completely randomly.

Pair Corralation between Nikola Corp and Lindsay

Given the investment horizon of 90 days Nikola Corp is expected to under-perform the Lindsay. In addition to that, Nikola Corp is 16.62 times more volatile than Lindsay. It trades about -0.01 of its total potential returns per unit of risk. Lindsay is currently generating about 0.12 per unit of volatility. If you would invest  11,821  in Lindsay on December 29, 2024 and sell it today you would earn a total of  1,277  from holding Lindsay or generate 10.8% return on investment over 90 days.

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

Nikola Corp  vs.  Lindsay

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.

Lindsay

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nikola Corp and Lindsay

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

The idea behind Nikola Corp and Lindsay 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.