Correlation Between Tesla and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Tesla and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Tesla and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Medical Facilities.
Diversification Opportunities for Tesla and Medical Facilities
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Medical is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Tesla i.e., Tesla and Medical Facilities go up and down completely randomly.
Pair Corralation between Tesla and Medical Facilities
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 1.64 times more return on investment than Medical Facilities. However, Tesla is 1.64 times more volatile than Medical Facilities. It trades about 0.1 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.16 per unit of risk. If you would invest 3,458 in Tesla Inc CDR on November 3, 2024 and sell it today you would earn a total of 216.00 from holding Tesla Inc CDR or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Medical Facilities
Performance |
| Timeline |
| Tesla Inc CDR |
| Medical Facilities |
Tesla and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Medical Facilities
The main advantage of trading using opposite Tesla and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Tesla vs. Thunderbird Entertainment Group | Tesla vs. T2 Metals Corp | Tesla vs. Rocky Mountain Liquor | Tesla vs. Mako Mining Corp |
| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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