Correlation Between Tesla and Savaria
Can any of the company-specific risk be diversified away by investing in both Tesla and Savaria 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 Savaria 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 Savaria, you can compare the effects of market volatilities on Tesla and Savaria 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 Savaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Savaria.
Diversification Opportunities for Tesla and Savaria
Excellent diversification
The 3 months correlation between Tesla and Savaria is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Savaria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savaria 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 Savaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savaria has no effect on the direction of Tesla i.e., Tesla and Savaria go up and down completely randomly.
Pair Corralation between Tesla and Savaria
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 2.28 times more return on investment than Savaria. However, Tesla is 2.28 times more volatile than Savaria. It trades about 0.08 of its potential returns per unit of risk. Savaria is currently generating about 0.06 per unit of risk. If you would invest 1,571 in Tesla Inc CDR on September 19, 2024 and sell it today you would earn a total of 2,800 from holding Tesla Inc CDR or generate 178.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Savaria
Performance |
| Timeline |
| Tesla Inc CDR |
| Savaria |
Tesla and Savaria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Savaria
The main advantage of trading using opposite Tesla and Savaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Savaria 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 Savaria will offset losses from the drop in Savaria's long position.| Tesla vs. Atrium Mortgage Investment | Tesla vs. Verizon Communications CDR | Tesla vs. Partners Value Investments | Tesla vs. Highwood Asset Management |
| Savaria vs. Alphabet Inc CDR | Savaria vs. Microsoft Corp CDR | Savaria vs. Tesla Inc CDR | Savaria vs. INTEL CDR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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