Correlation Between Tesla and Sypris Solutions
Can any of the company-specific risk be diversified away by investing in both Tesla and Sypris Solutions 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 Sypris Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Sypris Solutions, you can compare the effects of market volatilities on Tesla and Sypris Solutions 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 Sypris Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Sypris Solutions.
Diversification Opportunities for Tesla and Sypris Solutions
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tesla and Sypris is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Sypris Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sypris Solutions 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 Sypris Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sypris Solutions has no effect on the direction of Tesla i.e., Tesla and Sypris Solutions go up and down completely randomly.
Pair Corralation between Tesla and Sypris Solutions
Given the investment horizon of 90 days Tesla Inc is expected to generate 2.11 times more return on investment than Sypris Solutions. However, Tesla is 2.11 times more volatile than Sypris Solutions. It trades about 0.19 of its potential returns per unit of risk. Sypris Solutions is currently generating about 0.05 per unit of risk. If you would invest 21,060 in Tesla Inc on September 3, 2024 and sell it today you would earn a total of 13,456 from holding Tesla Inc or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Sypris Solutions
Performance |
| Timeline |
| Tesla Inc |
| Sypris Solutions |
Tesla and Sypris Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Sypris Solutions
The main advantage of trading using opposite Tesla and Sypris Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Sypris Solutions 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 Sypris Solutions will offset losses from the drop in Sypris Solutions' long position.The idea behind Tesla Inc and Sypris Solutions 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.| Sypris Solutions vs. Monro Muffler Brake | Sypris Solutions vs. Magna International | Sypris Solutions vs. BorgWarner | Sypris Solutions vs. Mobileye Global Class |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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