Correlation Between IA Financial and Tesla
Can any of the company-specific risk be diversified away by investing in both IA Financial 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 IA Financial and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Tesla Inc CDR, you can compare the effects of market volatilities on IA Financial 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 IA Financial with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Tesla.
Diversification Opportunities for IA Financial and Tesla
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAG and Tesla is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial 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 IA Financial 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 iA Financial 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 IA Financial i.e., IA Financial and Tesla go up and down completely randomly.
Pair Corralation between IA Financial and Tesla
Assuming the 90 days trading horizon IA Financial is expected to generate 1.19 times less return on investment than Tesla. But when comparing it to its historical volatility, iA Financial is 2.51 times less risky than Tesla. It trades about 0.09 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,198 in Tesla Inc CDR on August 31, 2024 and sell it today you would earn a total of 942.00 from holding Tesla Inc CDR or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Tesla Inc CDR
Performance |
| Timeline |
| iA Financial |
| Tesla Inc CDR |
IA Financial and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Tesla
The main advantage of trading using opposite IA Financial and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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.| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
| Tesla vs. Berkshire Hathaway CDR | Tesla vs. JPMorgan Chase Co | Tesla vs. Bank of America | Tesla vs. Alphabet Inc CDR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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