Correlation Between Goodfood Market and Tesla

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

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

Diversification Opportunities for Goodfood Market and Tesla

0.92

Correlation Coefficient

Goodfood Market  Tesla

Almost no diversification

The 3 months correlation between Goodfood and Tesla is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Goodfood Market Corp and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Goodfood Market 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 Goodfood Market Corp 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 CDR has no effect on the direction of Goodfood Market i.e., Goodfood Market and Tesla go up and down completely randomly.

Pair Corralation between Goodfood Market and Tesla

Assuming the 90 days trading horizon Goodfood Market is expected to generate 1.37 times less return on investment than Tesla. In addition to that, Goodfood Market is 1.28 times more volatile than Tesla Inc CDR. It trades about 0.21 of its total potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.36 per unit of volatility. If you would invest  2,217  in Tesla Inc CDR on September 5, 2024 and sell it today you would earn a total of  987.00  from holding Tesla Inc CDR or generate 44.52% return on investment over 90 days.

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

Goodfood Market Corp  vs.  Tesla Inc CDR

Goodfood Market Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goodfood Market Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Goodfood Market displayed solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodfood Market and Tesla

The main advantage of trading using opposite Goodfood Market and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodfood Market 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 Goodfood Market Corp and Tesla Inc CDR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.