Correlation Between Tesla and Controladora Vuela

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

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

Diversification Opportunities for Tesla and Controladora Vuela

0.64

Correlation Coefficient

Tesla  Controladora Vuela

Poor diversification

The 3 months correlation between Tesla and Controladora is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Controladora Vuela Compaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Controladora Vuela Compaa 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 Controladora Vuela. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Controladora Vuela Compaa has no effect on the direction of Tesla i.e., Tesla and Controladora Vuela go up and down completely randomly.

Pair Corralation between Tesla and Controladora Vuela

Assuming the 90 days trading horizon Tesla Inc is expected to generate 1.45 times more return on investment than Controladora Vuela. However, Tesla is 1.45 times more volatile than Controladora Vuela Compaa. It trades about -0.1 of its potential returns per unit of risk. Controladora Vuela Compaa is currently generating about -0.17 per unit of risk. If you would invest  749,406  in Tesla Inc on December 5, 2024 and sell it today you would lose (181,890) from holding Tesla Inc or give up 24.27% of portfolio value over 90 days.

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

Tesla Inc  vs.  Controladora Vuela Compaa

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.

Controladora Vuela Compaa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Controladora Vuela Compaa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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 Tesla and Controladora Vuela

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

The idea behind Tesla Inc and Controladora Vuela Compaa 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.