Correlation Between Tesla and Lend Lease

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

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

Diversification Opportunities for Tesla and Lend Lease

-0.38

Correlation Coefficient

Tesla  Lend Lease

Very good diversification

The 3 months correlation between Tesla and Lend is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group 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 Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of Tesla i.e., Tesla and Lend Lease go up and down completely randomly.

Pair Corralation between Tesla and Lend Lease

Given the investment horizon of 90 days Tesla Inc is expected to generate 0.92 times more return on investment than Lend Lease. However, Tesla Inc is 1.09 times less risky than Lend Lease. It trades about 0.04 of its potential returns per unit of risk. Lend Lease Group is currently generating about -0.18 per unit of risk. If you would invest  38,979  in Tesla Inc on October 10, 2024 and sell it today you would earn a total of  515.00  from holding Tesla Inc or generate 1.32% return on investment over 90 days.

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

Tesla Inc  vs.  Lend Lease Group

Tesla Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 14 (%) 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.

Lend Lease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tesla and Lend Lease

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

The idea behind Tesla Inc and Lend Lease Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.