Correlation Between Tesla and Pace Metals

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

Diversification Opportunities for Tesla and Pace Metals

-0.31

Correlation Coefficient

Tesla  Pace Metals

Very good diversification

The 3 months correlation between Tesla and Pace is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Pace Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Metals 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 Pace Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Metals has no effect on the direction of Tesla i.e., Tesla and Pace Metals go up and down completely randomly.

Pair Corralation between Tesla and Pace Metals

If you would invest  16.00  in Pace Metals on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Pace Metals or generate 0.0% return on investment over 90 days.

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

Tesla Inc CDR  vs.  Pace Metals

Tesla Inc CDR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pace Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace Metals 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 fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tesla and Pace Metals

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

The idea behind Tesla Inc CDR and Pace Metals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.