Correlation Between Tesla and Fremont Gold
Can any of the company-specific risk be diversified away by investing in both Tesla and Fremont Gold 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 Fremont Gold 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 Fremont Gold, you can compare the effects of market volatilities on Tesla and Fremont Gold 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 Fremont Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Fremont Gold.
Diversification Opportunities for Tesla and Fremont Gold
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesla and Fremont is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold 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 Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Tesla i.e., Tesla and Fremont Gold go up and down completely randomly.
Pair Corralation between Tesla and Fremont Gold
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 0.53 times more return on investment than Fremont Gold. However, Tesla Inc CDR is 1.9 times less risky than Fremont Gold. It trades about 0.04 of its potential returns per unit of risk. Fremont Gold is currently generating about 0.02 per unit of risk. If you would invest 2,287 in Tesla Inc CDR on September 1, 2024 and sell it today you would earn a total of 853.00 from holding Tesla Inc CDR or generate 37.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Fremont Gold
Performance |
| Timeline |
| Tesla Inc CDR |
| Fremont Gold |
Tesla and Fremont Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Fremont Gold
The main advantage of trading using opposite Tesla and Fremont Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Fremont Gold 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 Fremont Gold will offset losses from the drop in Fremont Gold's long position.| Tesla vs. NovaGold Resources | Tesla vs. HPQ Silicon Resources | Tesla vs. Eastwood Bio Medical Canada | Tesla vs. Diamond Fields Resources |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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