Correlation Between Textainer Group and Nikola Corp

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

Diversification Opportunities for Textainer Group and Nikola Corp

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Textainer and Nikola is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola Corp and Textainer Group 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 Textainer Group Holdings 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 Textainer Group i.e., Textainer Group and Nikola Corp go up and down completely randomly.

Pair Corralation between Textainer Group and Nikola Corp

Assuming the 90 days horizon Textainer Group Holdings is expected to generate 0.54 times more return on investment than Nikola Corp. However, Textainer Group Holdings is 1.85 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 -0.26 per unit of risk. If you would invest  70.00  in Textainer Group Holdings on September 17, 2024 and sell it today you would earn a total of  7.00  from holding Textainer Group Holdings or generate 10.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Textainer Group Holdings  vs.  Nikola Corp

 Performance 
       Timeline  
Textainer Group Holdings 

Risk-Adjusted Performance

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Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Textainer Group reported solid returns over the last few months and may actually be approaching a breakup point.
Nikola Corp 

Risk-Adjusted Performance

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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.

Textainer Group and Nikola Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Textainer Group and Nikola Corp

The main advantage of trading using opposite Textainer Group and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textainer Group 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 Textainer Group Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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