Correlation Between Tesla and PLBIIJ

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

By analyzing existing cross correlation between Tesla Inc and PLBIIJ 425 05 MAY 25, you can compare the effects of market volatilities on Tesla and PLBIIJ 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 PLBIIJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and PLBIIJ.

Diversification Opportunities for Tesla and PLBIIJ

-0.66

Correlation Coefficient

Tesla  PLBIIJ

Excellent diversification

The 3 months correlation between Tesla and PLBIIJ is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and PLBIIJ 425 05 MAY 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLBIIJ 425 05 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 PLBIIJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLBIIJ 425 05 has no effect on the direction of Tesla i.e., Tesla and PLBIIJ go up and down completely randomly.

Pair Corralation between Tesla and PLBIIJ

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the PLBIIJ. In addition to that, Tesla is 12.05 times more volatile than PLBIIJ 425 05 MAY 25. It trades about -0.19 of its total potential returns per unit of risk. PLBIIJ 425 05 MAY 25 is currently generating about -0.27 per unit of volatility. If you would invest  9,970  in PLBIIJ 425 05 MAY 25 on December 23, 2024 and sell it today you would lose (135.00) from holding PLBIIJ 425 05 MAY 25 or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	22.95%
Values	Daily Returns

Tesla Inc  vs.  PLBIIJ 425 05 MAY 25

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PLBIIJ 425 05

Risk-Adjusted Performance

Very Weak

Over the last 90 days PLBIIJ 425 05 MAY 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PLBIIJ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and PLBIIJ

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

The idea behind Tesla Inc and PLBIIJ 425 05 MAY 25 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.