Correlation Between Tesla and Brightrock Gold

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

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

Diversification Opportunities for Tesla and Brightrock Gold

-0.83

Correlation Coefficient

Tesla  Brightrock Gold

Pay attention - limited upside

The 3 months correlation between Tesla and Brightrock is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Brightrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightrock Gold 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 are associated (or correlated) with Brightrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightrock Gold Corp has no effect on the direction of Tesla i.e., Tesla and Brightrock Gold go up and down completely randomly.

Pair Corralation between Tesla and Brightrock Gold

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Brightrock Gold. But the stock apears to be less risky and, when comparing its historical volatility, Tesla Inc is 1.8 times less risky than Brightrock Gold. The stock trades about -0.18 of its potential returns per unit of risk. The Brightrock Gold Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7.30  in Brightrock Gold Corp on October 15, 2024 and sell it today you would earn a total of  2.10  from holding Brightrock Gold Corp or generate 28.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Tesla Inc  vs.  Brightrock Gold Corp

Tesla Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brightrock Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tesla and Brightrock Gold

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

The idea behind Tesla Inc and Brightrock Gold 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.