Correlation Between Tesla and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Tesla and Lucara Diamond 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 Lucara Diamond 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 Lucara Diamond Corp, you can compare the effects of market volatilities on Tesla and Lucara Diamond 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 Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Lucara Diamond.
Diversification Opportunities for Tesla and Lucara Diamond
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tesla and Lucara is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp 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 Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Tesla i.e., Tesla and Lucara Diamond go up and down completely randomly.
Pair Corralation between Tesla and Lucara Diamond
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 0.58 times more return on investment than Lucara Diamond. However, Tesla Inc CDR is 1.73 times less risky than Lucara Diamond. It trades about -0.06 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.2 per unit of risk. If you would invest 3,592 in Tesla Inc CDR on November 8, 2024 and sell it today you would lose (162.00) from holding Tesla Inc CDR or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Tesla Inc CDR vs. Lucara Diamond Corp
Performance |
| Timeline |
| Tesla Inc CDR |
| Lucara Diamond Corp |
Tesla and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Lucara Diamond
The main advantage of trading using opposite Tesla and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Tesla vs. Mako Mining Corp | Tesla vs. T2 Metals Corp | Tesla vs. Black Mammoth Metals | Tesla vs. Ramp Metals |
| Lucara Diamond vs. Mountain Province Diamonds | Lucara Diamond vs. Lundin Gold | Lucara Diamond vs. Mandalay Resources Corp | Lucara Diamond vs. North Arrow Minerals |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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