Correlation Between Tesla and ProShares
Can any of the company-specific risk be diversified away by investing in both Tesla and ProShares 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 ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and ProShares SP 500, you can compare the effects of market volatilities on Tesla and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and ProShares.
Diversification Opportunities for Tesla and ProShares
Weak diversification
The 3 months correlation between Tesla and ProShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Tesla i.e., Tesla and ProShares go up and down completely randomly.
Pair Corralation between Tesla and ProShares
Given the investment horizon of 90 days Tesla Inc is expected to generate 5.97 times more return on investment than ProShares. However, Tesla is 5.97 times more volatile than ProShares SP 500. It trades about 0.05 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.12 per unit of risk. If you would invest 24,672 in Tesla Inc on August 24, 2024 and sell it today you would earn a total of 9,292 from holding Tesla Inc or generate 37.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tesla Inc vs. ProShares SP 500
Performance |
| Timeline |
| Tesla Inc |
| ProShares SP 500 |
Tesla and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and ProShares
The main advantage of trading using opposite Tesla and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.The idea behind Tesla Inc and ProShares SP 500 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.| ProShares vs. Vanguard Russell 1000 | ProShares vs. Vanguard Russell 2000 | ProShares vs. Vanguard Russell 3000 | ProShares vs. Vanguard Russell 2000 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |