Correlation Between Tesla and BASE
Can any of the company-specific risk be diversified away by investing in both Tesla and BASE 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 BASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and BASE Inc, you can compare the effects of market volatilities on Tesla and BASE 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 BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and BASE.
Diversification Opportunities for Tesla and BASE
Poor diversification
The 3 months correlation between Tesla and BASE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc 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 are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Tesla i.e., Tesla and BASE go up and down completely randomly.
Pair Corralation between Tesla and BASE
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the BASE. In addition to that, Tesla is 3.3 times more volatile than BASE Inc. It trades about -0.01 of its total potential returns per unit of risk. BASE Inc is currently generating about 0.12 per unit of volatility. If you would invest 193.00 in BASE Inc on October 20, 2024 and sell it today you would earn a total of 6.00 from holding BASE Inc or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Tesla Inc vs. BASE Inc
Performance |
| Timeline |
| Tesla Inc |
| BASE Inc |
Tesla and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and BASE
The main advantage of trading using opposite Tesla and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE's long position.| Tesla vs. Canoo Inc | Tesla vs. Aquagold International | Tesla vs. Morningstar Unconstrained Allocation | Tesla vs. Via Renewables |
| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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