Correlation Between NVIDIA and Tesla

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Tesla Inc, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Tesla.

Diversification Opportunities for NVIDIA and Tesla

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between NVIDIA and Tesla is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Tesla go up and down completely randomly.

Pair Corralation between NVIDIA and Tesla

Assuming the 90 days trading horizon NVIDIA is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.15 times less risky than Tesla. The stock trades about -0.21 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest  636,228  in Tesla Inc on September 15, 2024 and sell it today you would earn a total of  235,879  from holding Tesla Inc or generate 37.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NVIDIA  vs.  Tesla Inc

 Performance 
       Timeline  
NVIDIA 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, NVIDIA showed solid returns over the last few months and may actually be approaching a breakup point.
Tesla Inc 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
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. In spite of fairly weak basic indicators, Tesla showed solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA and Tesla Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NVIDIA and Tesla

The main advantage of trading using opposite NVIDIA and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.
NVIDIA vs. Grupo Carso SAB
NVIDIA vs. Cognizant Technology Solutions
NVIDIA vs. New Oriental Education
NVIDIA vs. McEwen Mining
The idea behind NVIDIA 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. FibraHotel
Tesla vs. Micron Technology
Tesla vs. United Airlines Holdings
Tesla vs. Hoteles City Express
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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
CEOs Directory
Screen CEOs from public companies around the world
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY