Correlation Between Tesla and Accord Financial

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

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

Diversification Opportunities for Tesla and Accord Financial

-0.74

Correlation Coefficient

Tesla  Accord Financial

Pay attention - limited upside

The 3 months correlation between Tesla and Accord is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Accord Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accord Financial Corp 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 CDR are associated (or correlated) with Accord Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accord Financial Corp has no effect on the direction of Tesla i.e., Tesla and Accord Financial go up and down completely randomly.

Pair Corralation between Tesla and Accord Financial

Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 2.97 times more return on investment than Accord Financial. However, Tesla is 2.97 times more volatile than Accord Financial Corp. It trades about 0.23 of its potential returns per unit of risk. Accord Financial Corp is currently generating about -0.11 per unit of risk. If you would invest  2,098  in Tesla Inc CDR on September 12, 2024 and sell it today you would earn a total of  1,772  from holding Tesla Inc CDR or generate 84.46% return on investment over 90 days.

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

Tesla Inc CDR  vs.  Accord Financial Corp

Tesla Inc CDR

Risk-Adjusted Performance

18 of 100

Solid

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

Accord Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accord Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Tesla and Accord Financial

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

The idea behind Tesla Inc CDR and Accord Financial Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.