Correlation Between Tesla and ATT
Can any of the company-specific risk be diversified away by investing in both Tesla and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and ATT Inc, you can compare the effects of market volatilities on Tesla and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and ATT.
Diversification Opportunities for Tesla and ATT
Poor diversification
The 3 months correlation between Tesla and ATT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Tesla i.e., Tesla and ATT go up and down completely randomly.
Pair Corralation between Tesla and ATT
Given the investment horizon of 90 days Tesla Inc is expected to generate 4.48 times more return on investment than ATT. However, Tesla is 4.48 times more volatile than ATT Inc. It trades about 0.27 of its potential returns per unit of risk. ATT Inc is currently generating about 0.26 per unit of risk. If you would invest 26,919 in Tesla Inc on August 26, 2024 and sell it today you would earn a total of 8,337 from holding Tesla Inc or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. ATT Inc
Performance |
| Timeline |
| Tesla Inc |
| ATT Inc |
Tesla and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and ATT
The main advantage of trading using opposite Tesla and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.The idea behind Tesla Inc and ATT Inc 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.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |