Correlation Between Broadstone Net and Tesla

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

By analyzing existing cross correlation between Broadstone Net Lease and Tesla Inc, you can compare the effects of market volatilities on Broadstone Net and Tesla 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 Broadstone Net with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Tesla.

Diversification Opportunities for Broadstone Net and Tesla

-0.87

Correlation Coefficient

Broadstone Net  Tesla

Pay attention - limited upside

The 3 months correlation between Broadstone and Tesla is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Broadstone Net i.e., Broadstone Net and Tesla go up and down completely randomly.

Pair Corralation between Broadstone Net and Tesla

Considering the 90-day investment horizon Broadstone Net Lease is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Broadstone Net Lease is 3.55 times less risky than Tesla. The stock trades about -0.36 of its potential returns per unit of risk. The Tesla Inc is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  43,623  in Tesla Inc on October 14, 2024 and sell it today you would lose (4,149) from holding Tesla Inc or give up 9.51% of portfolio value over 90 days.

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

Broadstone Net Lease  vs.  Tesla Inc

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tesla Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadstone Net and Tesla

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

The idea behind Broadstone Net Lease and Tesla Inc 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 Anywhere module to track or share privately all of your investments from the convenience of any device.