Correlation Between Fisker and Tesla
Can any of the company-specific risk be diversified away by investing in both Fisker 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 Fisker and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fisker Inc and Tesla Inc, you can compare the effects of market volatilities on Fisker 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 Fisker with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisker and Tesla.
Diversification Opportunities for Fisker and Tesla
Average diversification
The 3 months correlation between Fisker and Tesla is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Fisker 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 Fisker Inc 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 Fisker i.e., Fisker and Tesla go up and down completely randomly.
Pair Corralation between Fisker and Tesla
If you would invest 20,783 in Tesla Inc on October 20, 2024 and sell it today you would earn a total of 21,867 from holding Tesla Inc or generate 105.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Fisker Inc vs. Tesla Inc
Performance |
| Timeline |
| Fisker Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tesla Inc |
Fisker and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fisker and Tesla
The main advantage of trading using opposite Fisker and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisker 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 Fisker Inc 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.| Tesla vs. Canoo Inc | Tesla vs. Aquagold International | Tesla vs. Morningstar Unconstrained Allocation | Tesla vs. Via Renewables |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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