Correlation Between Tesla and HIMARK

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

By analyzing existing cross correlation between Tesla Inc and HIMARK 145 10 MAY 26, you can compare the effects of market volatilities on Tesla and HIMARK 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 HIMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and HIMARK.

Diversification Opportunities for Tesla and HIMARK

0.86

Correlation Coefficient

Tesla  HIMARK

Very poor diversification

The 3 months correlation between Tesla and HIMARK is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and HIMARK 145 10 MAY 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIMARK 145 10 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 HIMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIMARK 145 10 has no effect on the direction of Tesla i.e., Tesla and HIMARK go up and down completely randomly.

Pair Corralation between Tesla and HIMARK

Given the investment horizon of 90 days Tesla Inc is expected to generate 2.34 times more return on investment than HIMARK. However, Tesla is 2.34 times more volatile than HIMARK 145 10 MAY 26. It trades about -0.13 of its potential returns per unit of risk. HIMARK 145 10 MAY 26 is currently generating about -0.37 per unit of risk. If you would invest  45,413  in Tesla Inc on October 26, 2024 and sell it today you would lose (4,755) from holding Tesla Inc or give up 10.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	31.58%
Values	Daily Returns

Tesla Inc  vs.  HIMARK 145 10 MAY 26

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.

HIMARK 145 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HIMARK 145 10 MAY 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HIMARK 145 10 MAY 26 investors.

Pair Trading with Tesla and HIMARK

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

The idea behind Tesla Inc and HIMARK 145 10 MAY 26 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.