Correlation Between Tesla and Empreendimentos Pague

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

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

Diversification Opportunities for Tesla and Empreendimentos Pague

-0.03

Correlation Coefficient

Tesla  Empreendimentos Pague

Good diversification

The 3 months correlation between Tesla and Empreendimentos is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Empreendimentos Pague Menos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empreendimentos Pague 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 Empreendimentos Pague. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empreendimentos Pague has no effect on the direction of Tesla i.e., Tesla and Empreendimentos Pague go up and down completely randomly.

Pair Corralation between Tesla and Empreendimentos Pague

Assuming the 90 days trading horizon Tesla Inc is expected to generate 1.36 times more return on investment than Empreendimentos Pague. However, Tesla is 1.36 times more volatile than Empreendimentos Pague Menos. It trades about 0.28 of its potential returns per unit of risk. Empreendimentos Pague Menos is currently generating about 0.12 per unit of risk. If you would invest  4,010  in Tesla Inc on October 23, 2024 and sell it today you would earn a total of  4,240  from holding Tesla Inc or generate 105.74% 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.  Empreendimentos Pague Menos

Tesla Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Empreendimentos Pague

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Empreendimentos Pague Menos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Empreendimentos Pague unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and Empreendimentos Pague

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

The idea behind Tesla Inc and Empreendimentos Pague Menos 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.