Correlation Between Worksport and Nio

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

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

Diversification Opportunities for Worksport and Nio

-0.6

Correlation Coefficient

Worksport  Nio

Excellent diversification

The 3 months correlation between Worksport and Nio is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Worksport and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Worksport 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 Worksport are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Worksport i.e., Worksport and Nio go up and down completely randomly.

Pair Corralation between Worksport and Nio

Given the investment horizon of 90 days Worksport is expected to generate 1.48 times more return on investment than Nio. However, Worksport is 1.48 times more volatile than Nio Class A. It trades about 0.04 of its potential returns per unit of risk. Nio Class A is currently generating about 0.03 per unit of risk. If you would invest  76.00  in Worksport on September 23, 2024 and sell it today you would earn a total of  8.00  from holding Worksport or generate 10.53% return on investment over 90 days.

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

Worksport  vs.  Nio Class A

Worksport

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worksport are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Worksport reported solid returns over the last few months and may actually be approaching a breakup point.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Worksport and Nio

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

The idea behind Worksport and Nio Class A 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.