Correlation Between Falcon Energy and Tesla
Can any of the company-specific risk be diversified away by investing in both Falcon Energy 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 Falcon Energy and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Tesla Inc CDR, you can compare the effects of market volatilities on Falcon Energy 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 Falcon Energy with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Tesla.
Diversification Opportunities for Falcon Energy and Tesla
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Tesla is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Falcon Energy 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 Falcon Energy Materials 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 CDR has no effect on the direction of Falcon Energy i.e., Falcon Energy and Tesla go up and down completely randomly.
Pair Corralation between Falcon Energy and Tesla
Assuming the 90 days trading horizon Falcon Energy is expected to generate 1.15 times less return on investment than Tesla. But when comparing it to its historical volatility, Falcon Energy Materials is 1.07 times less risky than Tesla. It trades about 0.24 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,394 in Tesla Inc CDR on August 29, 2024 and sell it today you would earn a total of 687.00 from holding Tesla Inc CDR or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Tesla Inc CDR
Performance |
| Timeline |
| Falcon Energy Materials |
| Tesla Inc CDR |
Falcon Energy and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Tesla
The main advantage of trading using opposite Falcon Energy and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy 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.| Falcon Energy vs. NeXGold Mining Corp | Falcon Energy vs. US Financial 15 | Falcon Energy vs. Metalero Mining Corp | Falcon Energy vs. CI Financial Corp |
| Tesla vs. Western Copper and | Tesla vs. iA Financial | Tesla vs. Canso Credit Trust | Tesla vs. Fairfax Financial Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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