Correlation Between Tesla and Great Elm
Can any of the company-specific risk be diversified away by investing in both Tesla and Great Elm 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 Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Great Elm Capital, you can compare the effects of market volatilities on Tesla and Great Elm 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 Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Great Elm.
Diversification Opportunities for Tesla and Great Elm
Excellent diversification
The 3 months correlation between Tesla and Great is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Tesla i.e., Tesla and Great Elm go up and down completely randomly.
Pair Corralation between Tesla and Great Elm
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Great Elm. In addition to that, Tesla is 26.36 times more volatile than Great Elm Capital. It trades about -0.33 of its total potential returns per unit of risk. Great Elm Capital is currently generating about 0.25 per unit of volatility. If you would invest 2,515 in Great Elm Capital on December 11, 2024 and sell it today you would earn a total of 38.00 from holding Great Elm Capital or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.12% |
| Values | Daily Returns |
Tesla Inc vs. Great Elm Capital
Performance |
| Timeline |
| Tesla Inc |
| Great Elm Capital |
Tesla and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Great Elm
The main advantage of trading using opposite Tesla and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.The idea behind Tesla Inc and Great Elm Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Great Elm vs. Golden Energy Offshore | ||
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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