Correlation Between Tesla and Joo Fortes

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

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

Diversification Opportunities for Tesla and Joo Fortes

-0.21

Correlation Coefficient

Tesla  Joo Fortes

Very good diversification

The 3 months correlation between Tesla and Joo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Joo Fortes Engenharia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joo Fortes Engenharia 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 Joo Fortes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joo Fortes Engenharia has no effect on the direction of Tesla i.e., Tesla and Joo Fortes go up and down completely randomly.

Pair Corralation between Tesla and Joo Fortes

Assuming the 90 days trading horizon Tesla Inc is expected to under-perform the Joo Fortes. But the stock apears to be less risky and, when comparing its historical volatility, Tesla Inc is 1.1 times less risky than Joo Fortes. The stock trades about -0.16 of its potential returns per unit of risk. The Joo Fortes Engenharia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Joo Fortes Engenharia on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Joo Fortes Engenharia or generate 3.51% return on investment over 90 days.

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

Tesla Inc  vs.  Joo Fortes Engenharia

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 weak 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.

Joo Fortes Engenharia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joo Fortes Engenharia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Joo Fortes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tesla and Joo Fortes

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

The idea behind Tesla Inc and Joo Fortes Engenharia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.