Correlation Between INSURANCE AUST and Tesla

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

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

Diversification Opportunities for INSURANCE AUST and Tesla

0.86

Correlation Coefficient

INSURANCE AUST  Tesla

Very poor diversification

The 3 months correlation between INSURANCE and Tesla is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Tesla go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Tesla

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, INSURANCE AUST GRP is 2.06 times less risky than Tesla. The stock trades about -0.04 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  33,910  in Tesla Inc on September 23, 2024 and sell it today you would earn a total of  8,515  from holding Tesla Inc or generate 25.11% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  Tesla Inc

INSURANCE AUST GRP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, INSURANCE AUST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INSURANCE AUST and Tesla

The main advantage of trading using opposite INSURANCE AUST and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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 INSURANCE AUST GRP 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.