Correlation Between Tesla and Mativ Holdings

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

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

Diversification Opportunities for Tesla and Mativ Holdings

-0.86

Correlation Coefficient

Tesla  Mativ Holdings

Pay attention - limited upside

The 3 months correlation between Tesla and Mativ is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings 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 Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Tesla i.e., Tesla and Mativ Holdings go up and down completely randomly.

Pair Corralation between Tesla and Mativ Holdings

Given the investment horizon of 90 days Tesla Inc is expected to generate 1.05 times more return on investment than Mativ Holdings. However, Tesla is 1.05 times more volatile than Mativ Holdings. It trades about 0.6 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.06 per unit of risk. If you would invest  33,874  in Tesla Inc on September 19, 2024 and sell it today you would earn a total of  14,112  from holding Tesla Inc or generate 41.66% return on investment over 90 days.

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

Tesla Inc  vs.  Mativ Holdings

Tesla Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 20 (%) 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.

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tesla and Mativ Holdings

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

The idea behind Tesla Inc and Mativ Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.