Correlation Between Simon Property and Tesla

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

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

Diversification Opportunities for Simon Property and Tesla

-0.69

Correlation Coefficient

Simon Property  Tesla

Excellent diversification

The 3 months correlation between Simon and Tesla is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Tesla go up and down completely randomly.

Pair Corralation between Simon Property and Tesla

Considering the 90-day investment horizon Simon Property is expected to generate 2.53 times less return on investment than Tesla. But when comparing it to its historical volatility, Simon Property Group is 3.16 times less risky than Tesla. It trades about 0.09 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,865  in Tesla Inc on December 2, 2024 and sell it today you would earn a total of  11,433  from holding Tesla Inc or generate 64.0% return on investment over 90 days.

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

Simon Property Group  vs.  Tesla Inc

Simon Property Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Simon Property and Tesla

The main advantage of trading using opposite Simon Property and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.