Correlation Between Tesla and Fibra Terrafina

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

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

Diversification Opportunities for Tesla and Fibra Terrafina

0.07

Correlation Coefficient

Tesla  Fibra Terrafina

Significant diversification

The 3 months correlation between Tesla and Fibra is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Fibra Terrafina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Terrafina 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 Fibra Terrafina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Terrafina has no effect on the direction of Tesla i.e., Tesla and Fibra Terrafina go up and down completely randomly.

Pair Corralation between Tesla and Fibra Terrafina

Assuming the 90 days trading horizon Tesla Inc is expected to under-perform the Fibra Terrafina. In addition to that, Tesla is 1.75 times more volatile than Fibra Terrafina. It trades about -0.19 of its total potential returns per unit of risk. Fibra Terrafina is currently generating about -0.01 per unit of volatility. If you would invest  3,779  in Fibra Terrafina on December 22, 2024 and sell it today you would lose (128.00) from holding Fibra Terrafina or give up 3.39% of portfolio value over 90 days.

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

Tesla Inc  vs.  Fibra Terrafina

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. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Fibra Terrafina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fibra Terrafina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fibra Terrafina is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and Fibra Terrafina

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

The idea behind Tesla Inc and Fibra Terrafina 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 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.