Correlation Between Tesla and Mutual Federal

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

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

Diversification Opportunities for Tesla and Mutual Federal

0.52

Correlation Coefficient

Tesla  Mutual Federal

Very weak diversification

The 3 months correlation between Tesla and Mutual is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Mutual Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Federal Bancorp 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 Mutual Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Federal Bancorp has no effect on the direction of Tesla i.e., Tesla and Mutual Federal go up and down completely randomly.

Pair Corralation between Tesla and Mutual Federal

Given the investment horizon of 90 days Tesla Inc is expected to generate 1.53 times more return on investment than Mutual Federal. However, Tesla is 1.53 times more volatile than Mutual Federal Bancorp. It trades about 0.19 of its potential returns per unit of risk. Mutual Federal Bancorp is currently generating about 0.01 per unit of risk. If you would invest  26,919  in Tesla Inc on October 25, 2024 and sell it today you would earn a total of  14,592  from holding Tesla Inc or generate 54.21% return on investment over 90 days.

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

Tesla Inc  vs.  Mutual Federal Bancorp

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.

Mutual Federal Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mutual Federal Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Mutual Federal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and Mutual Federal

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

The idea behind Tesla Inc and Mutual Federal Bancorp 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.