Correlation Between Tesla and Global Crossing
Can any of the company-specific risk be diversified away by investing in both Tesla and Global Crossing 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 Global Crossing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Global Crossing Airlines, you can compare the effects of market volatilities on Tesla and Global Crossing 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 Global Crossing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Global Crossing.
Diversification Opportunities for Tesla and Global Crossing
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tesla and Global is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Global Crossing Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Crossing Airlines 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 Global Crossing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Crossing Airlines has no effect on the direction of Tesla i.e., Tesla and Global Crossing go up and down completely randomly.
Pair Corralation between Tesla and Global Crossing
Given the investment horizon of 90 days Tesla Inc is expected to generate 0.78 times more return on investment than Global Crossing. However, Tesla Inc is 1.28 times less risky than Global Crossing. It trades about 0.06 of its potential returns per unit of risk. Global Crossing Airlines is currently generating about -0.01 per unit of risk. If you would invest 19,464 in Tesla Inc on November 2, 2024 and sell it today you would earn a total of 22,465 from holding Tesla Inc or generate 115.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Global Crossing Airlines
Performance |
| Timeline |
| Tesla Inc |
| Global Crossing Airlines |
Tesla and Global Crossing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Global Crossing
The main advantage of trading using opposite Tesla and Global Crossing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Global Crossing 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 Global Crossing will offset losses from the drop in Global Crossing's long position.The idea behind Tesla Inc and Global Crossing Airlines 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.| Global Crossing vs. Finnair Oyj | Global Crossing vs. easyJet plc | Global Crossing vs. Norse Atlantic ASA | Global Crossing vs. Air New Zealand |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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