Correlation Between T Rex and AXS TSLA

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

By analyzing existing cross correlation between T Rex 2X Long and AXS TSLA Bear, you can compare the effects of market volatilities on T Rex and AXS TSLA 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 T Rex with a short position of AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and AXS TSLA.

Diversification Opportunities for T Rex and AXS TSLA

-0.02

Correlation Coefficient

T Rex  AXS TSLA

Good diversification

The 3 months correlation between NVDX and AXS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear and T Rex 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 T Rex 2X Long are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of T Rex i.e., T Rex and AXS TSLA go up and down completely randomly.

Pair Corralation between T Rex and AXS TSLA

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the AXS TSLA. But the etf apears to be less risky and, when comparing its historical volatility, T Rex 2X Long is 1.07 times less risky than AXS TSLA. The etf trades about -0.03 of its potential returns per unit of risk. The AXS TSLA Bear is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,092  in AXS TSLA Bear on November 28, 2024 and sell it today you would earn a total of  81.00  from holding AXS TSLA Bear or generate 1.98% return on investment over 90 days.

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

T Rex 2X Long  vs.  AXS TSLA Bear

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

AXS TSLA Bear

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Rex and AXS TSLA

The main advantage of trading using opposite T Rex and AXS TSLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, AXS TSLA 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 AXS TSLA will offset losses from the drop in AXS TSLA's long position.

The idea behind T Rex 2X Long and AXS TSLA Bear 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.