Correlation Between Porto Seguro and Tesla
Can any of the company-specific risk be diversified away by investing in both Porto Seguro 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 Porto Seguro and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porto Seguro SA and Tesla Inc, you can compare the effects of market volatilities on Porto Seguro 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 Porto Seguro with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porto Seguro and Tesla.
Diversification Opportunities for Porto Seguro and Tesla
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Porto and Tesla is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Porto Seguro SA and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Porto Seguro 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 Porto Seguro SA 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 Porto Seguro i.e., Porto Seguro and Tesla go up and down completely randomly.
Pair Corralation between Porto Seguro and Tesla
Assuming the 90 days trading horizon Porto Seguro SA is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Porto Seguro SA is 3.64 times less risky than Tesla. The stock trades about -0.06 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,802 in Tesla Inc on September 25, 2024 and sell it today you would earn a total of 3,548 from holding Tesla Inc or generate 73.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Porto Seguro SA vs. Tesla Inc
Performance |
| Timeline |
| Porto Seguro SA |
| Tesla Inc |
Porto Seguro and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porto Seguro and Tesla
The main advantage of trading using opposite Porto Seguro and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porto Seguro 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.| Porto Seguro vs. Banco Bradesco SA | Porto Seguro vs. Petrleo Brasileiro SA | Porto Seguro vs. Ita Unibanco Holding | Porto Seguro vs. Itasa Investimentos |
| Tesla vs. Marcopolo SA | Tesla vs. Randon SA Implementos | Tesla vs. Fras le SA | Tesla vs. Indstrias Romi SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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