Correlation Between IncomeShares Tesla and IncomeShares SP500

Can any of the company-specific risk be diversified away by investing in both IncomeShares Tesla and IncomeShares SP500 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 IncomeShares Tesla and IncomeShares SP500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IncomeShares Tesla TSLA and IncomeShares SP500 Options, you can compare the effects of market volatilities on IncomeShares Tesla and IncomeShares SP500 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 IncomeShares Tesla with a short position of IncomeShares SP500. Check out your portfolio center. Please also check ongoing floating volatility patterns of IncomeShares Tesla and IncomeShares SP500.

Diversification Opportunities for IncomeShares Tesla and IncomeShares SP500

0.83

Correlation Coefficient

IncomeShares Tesla  IncomeShares SP500

Very poor diversification

The 3 months correlation between IncomeShares and IncomeShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding IncomeShares Tesla TSLA and IncomeShares SP500 Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares SP500 and IncomeShares 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 IncomeShares Tesla TSLA are associated (or correlated) with IncomeShares SP500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares SP500 has no effect on the direction of IncomeShares Tesla i.e., IncomeShares Tesla and IncomeShares SP500 go up and down completely randomly.

Pair Corralation between IncomeShares Tesla and IncomeShares SP500

Assuming the 90 days trading horizon IncomeShares Tesla TSLA is expected to under-perform the IncomeShares SP500. In addition to that, IncomeShares Tesla is 3.61 times more volatile than IncomeShares SP500 Options. It trades about -0.17 of its total potential returns per unit of risk. IncomeShares SP500 Options is currently generating about -0.11 per unit of volatility. If you would invest  774.00  in IncomeShares SP500 Options on December 29, 2024 and sell it today you would lose (52.00) from holding IncomeShares SP500 Options or give up 6.72% of portfolio value over 90 days.

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

IncomeShares Tesla TSLA  vs.  IncomeShares SP500 Options

IncomeShares Tesla TSLA

Risk-Adjusted Performance

Very Weak

Over the last 90 days IncomeShares Tesla TSLA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

IncomeShares SP500

Risk-Adjusted Performance

Very Weak

Over the last 90 days IncomeShares SP500 Options has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with IncomeShares Tesla and IncomeShares SP500

The main advantage of trading using opposite IncomeShares Tesla and IncomeShares SP500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IncomeShares Tesla position performs unexpectedly, IncomeShares SP500 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 IncomeShares SP500 will offset losses from the drop in IncomeShares SP500's long position.

The idea behind IncomeShares Tesla TSLA and IncomeShares SP500 Options 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.