Correlation Between Tesla and Dream Industrial

Can any of the company-specific risk be diversified away by investing in both Tesla and Dream Industrial 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 Dream Industrial 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 Dream Industrial Real, you can compare the effects of market volatilities on Tesla and Dream Industrial 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 Dream Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Dream Industrial.

Diversification Opportunities for Tesla and Dream Industrial

0.46

Correlation Coefficient

Tesla  Dream Industrial

Very weak diversification

The 3 months correlation between Tesla and Dream is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Dream Industrial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Industrial Real 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 Dream Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Industrial Real has no effect on the direction of Tesla i.e., Tesla and Dream Industrial go up and down completely randomly.

Pair Corralation between Tesla and Dream Industrial

Assuming the 90 days trading horizon Tesla Inc CDR is expected to under-perform the Dream Industrial. In addition to that, Tesla is 3.81 times more volatile than Dream Industrial Real. It trades about -0.15 of its total potential returns per unit of risk. Dream Industrial Real is currently generating about -0.03 per unit of volatility. If you would invest  1,189  in Dream Industrial Real on December 24, 2024 and sell it today you would lose (31.00) from holding Dream Industrial Real or give up 2.61% of portfolio value over 90 days.

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

Tesla Inc CDR  vs.  Dream Industrial Real

Tesla Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dream Industrial Real

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tesla and Dream Industrial

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

The idea behind Tesla Inc CDR and Dream Industrial Real 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.