Correlation Between Tesla and Kemper

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

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

Diversification Opportunities for Tesla and Kemper

0.65

Correlation Coefficient

Tesla  Kemper

Poor diversification

The 3 months correlation between Tesla and Kemper is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Tesla 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 Tesla Inc are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Tesla i.e., Tesla and Kemper go up and down completely randomly.

Pair Corralation between Tesla and Kemper

Assuming the 90 days trading horizon Tesla Inc is expected to generate 1.92 times more return on investment than Kemper. However, Tesla is 1.92 times more volatile than Kemper. It trades about 0.09 of its potential returns per unit of risk. Kemper is currently generating about 0.09 per unit of risk. If you would invest  21,740  in Tesla Inc on October 2, 2024 and sell it today you would earn a total of  18,790  from holding Tesla Inc or generate 86.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Tesla Inc  vs.  Kemper

Tesla Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kemper

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kemper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and Kemper

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

The idea behind Tesla Inc and Kemper 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.