Correlation Between Visteon Corp and Tesla

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

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

Diversification Opportunities for Visteon Corp and Tesla

0.08

Correlation Coefficient

Visteon Corp  Tesla

Significant diversification

The 3 months correlation between Visteon and Tesla is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Visteon Corp 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 Visteon Corp are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Visteon Corp i.e., Visteon Corp and Tesla go up and down completely randomly.

Pair Corralation between Visteon Corp and Tesla

Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 610.96 times less return on investment than Tesla. But when comparing it to its historical volatility, Visteon Corp is 1.39 times less risky than Tesla. It trades about 0.0 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  33,874  in Tesla Inc on September 19, 2024 and sell it today you would earn a total of  14,112  from holding Tesla Inc or generate 41.66% return on investment over 90 days.

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

Visteon Corp  vs.  Tesla Inc

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Visteon Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tesla Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 20 (%) 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.

Pair Trading with Visteon Corp and Tesla

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

The idea behind Visteon Corp and Tesla Inc 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .