Correlation Between Tesla and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Tesla and Amazon CDR 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 Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc CDR and Amazon CDR, you can compare the effects of market volatilities on Tesla and Amazon CDR 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 Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Amazon CDR.
Diversification Opportunities for Tesla and Amazon CDR
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tesla and Amazon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR 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 CDR are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Tesla i.e., Tesla and Amazon CDR go up and down completely randomly.
Pair Corralation between Tesla and Amazon CDR
Assuming the 90 days trading horizon Tesla is expected to generate 1.09 times less return on investment than Amazon CDR. In addition to that, Tesla is 2.2 times more volatile than Amazon CDR. It trades about 0.09 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.21 per unit of volatility. If you would invest 2,618 in Amazon CDR on November 2, 2024 and sell it today you would earn a total of 172.00 from holding Amazon CDR or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Amazon CDR
Performance |
| Timeline |
| Tesla Inc CDR |
| Amazon CDR |
Tesla and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Amazon CDR
The main advantage of trading using opposite Tesla and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.| Tesla vs. Sun Peak Metals | Tesla vs. T2 Metals Corp | Tesla vs. Goodfood Market Corp | Tesla vs. Pace Metals |
| Amazon CDR vs. Ramp Metals | Amazon CDR vs. Calian Technologies | Amazon CDR vs. Stampede Drilling | Amazon CDR vs. Doman Building Materials |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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