Correlation Between Tesla and Imperial Metals
Can any of the company-specific risk be diversified away by investing in both Tesla and Imperial Metals 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 Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Imperial Metals, you can compare the effects of market volatilities on Tesla and Imperial Metals 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 Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Imperial Metals.
Diversification Opportunities for Tesla and Imperial Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and Imperial is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals 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 Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Tesla i.e., Tesla and Imperial Metals go up and down completely randomly.
Pair Corralation between Tesla and Imperial Metals
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.24 times more return on investment than Imperial Metals. However, Tesla is 1.24 times more volatile than Imperial Metals. It trades about 0.05 of its potential returns per unit of risk. Imperial Metals is currently generating about 0.01 per unit of risk. If you would invest 17,982 in Tesla Inc on August 27, 2024 and sell it today you would earn a total of 17,274 from holding Tesla Inc or generate 96.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Imperial Metals
Performance |
| Timeline |
| Tesla Inc |
| Imperial Metals |
Tesla and Imperial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Imperial Metals
The main advantage of trading using opposite Tesla and Imperial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Imperial Metals 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 Imperial Metals will offset losses from the drop in Imperial Metals' long position.The idea behind Tesla Inc and Imperial Metals 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.| Imperial Metals vs. Ascendant Resources | Imperial Metals vs. Cantex Mine Development | Imperial Metals vs. Amarc Resources | Imperial Metals vs. Sterling Metals Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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