Correlation Between Tesla and Kestrel Gold

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

Diversification Opportunities for Tesla and Kestrel Gold

-0.37

Correlation Coefficient

Tesla  Kestrel Gold

Very good diversification

The 3 months correlation between Tesla and Kestrel is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Kestrel Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kestrel Gold 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 Kestrel Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kestrel Gold has no effect on the direction of Tesla i.e., Tesla and Kestrel Gold go up and down completely randomly.

Pair Corralation between Tesla and Kestrel Gold

Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 0.46 times more return on investment than Kestrel Gold. However, Tesla Inc CDR is 2.18 times less risky than Kestrel Gold. It trades about 0.27 of its potential returns per unit of risk. Kestrel Gold is currently generating about 0.05 per unit of risk. If you would invest  2,292  in Tesla Inc CDR on October 6, 2024 and sell it today you would earn a total of  1,445  from holding Tesla Inc CDR or generate 63.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Tesla Inc CDR  vs.  Kestrel Gold

Tesla Inc CDR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 15 (%) 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.

Kestrel Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kestrel Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kestrel Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tesla and Kestrel Gold

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

The idea behind Tesla Inc CDR and Kestrel Gold 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.