Correlation Between Tesla and NHPBP

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

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

Diversification Opportunities for Tesla and NHPBP

-0.83

Correlation Coefficient

Tesla  NHPBP

Pay attention - limited upside

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

Pair Corralation between Tesla and NHPBP

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the NHPBP. In addition to that, Tesla is 2.04 times more volatile than NHPBP. It trades about -0.06 of its total potential returns per unit of risk. NHPBP is currently generating about -0.07 per unit of volatility. If you would invest  1,479  in NHPBP on October 12, 2024 and sell it today you would lose (53.00) from holding NHPBP or give up 3.58% of portfolio value over 90 days.

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

Tesla Inc  vs.  NHPBP

Tesla Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 17 (%) 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.

NHPBP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NHPBP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Tesla and NHPBP

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

The idea behind Tesla Inc and NHPBP 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..