Correlation Between Tesla and Acme United

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

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

Diversification Opportunities for Tesla and Acme United

-0.66

Correlation Coefficient

Tesla  Acme United

Excellent diversification

The 3 months correlation between Tesla and Acme is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United 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 Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of Tesla i.e., Tesla and Acme United go up and down completely randomly.

Pair Corralation between Tesla and Acme United

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Acme United. In addition to that, Tesla is 2.36 times more volatile than Acme United. It trades about -0.15 of its total potential returns per unit of risk. Acme United is currently generating about 0.08 per unit of volatility. If you would invest  3,667  in Acme United on December 27, 2024 and sell it today you would earn a total of  295.00  from holding Acme United or generate 8.04% return on investment over 90 days.

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

Tesla Inc  vs.  Acme United

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. Despite abnormal 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.

Acme United

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acme United are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Acme United may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tesla and Acme United

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

The idea behind Tesla Inc and Acme United 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.