Correlation Between Tesla and Credicorp
Can any of the company-specific risk be diversified away by investing in both Tesla and Credicorp 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 Tesla and Credicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Credicorp, you can compare the effects of market volatilities on Tesla and Credicorp 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 Tesla with a short position of Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Credicorp.
Diversification Opportunities for Tesla and Credicorp
Poor diversification
The 3 months correlation between Tesla and Credicorp is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and Tesla 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 Tesla Inc are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Tesla i.e., Tesla and Credicorp go up and down completely randomly.
Pair Corralation between Tesla and Credicorp
Assuming the 90 days trading horizon Tesla Inc is expected to generate 6.88 times more return on investment than Credicorp. However, Tesla is 6.88 times more volatile than Credicorp. It trades about 0.03 of its potential returns per unit of risk. Credicorp is currently generating about -0.22 per unit of risk. If you would invest 885,000 in Tesla Inc on October 20, 2024 and sell it today you would earn a total of 6,543 from holding Tesla Inc or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Tesla Inc vs. Credicorp
Performance |
| Timeline |
| Tesla Inc |
| Credicorp |
Tesla and Credicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Credicorp
The main advantage of trading using opposite Tesla and Credicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Credicorp 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 Credicorp will offset losses from the drop in Credicorp's long position.| Tesla vs. Capital One Financial | Tesla vs. United States Steel | Tesla vs. Monster Beverage Corp | Tesla vs. Grupo Hotelero Santa |
| Credicorp vs. CMR SAB de | Credicorp vs. Emerson Electric Co | Credicorp vs. American Express | Credicorp vs. Tesla Inc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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