Correlation Between Tesla and Tabcorp Holdings
Can any of the company-specific risk be diversified away by investing in both Tesla and Tabcorp Holdings 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 Tabcorp Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Tabcorp Holdings, you can compare the effects of market volatilities on Tesla and Tabcorp Holdings 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 Tabcorp Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Tabcorp Holdings.
Diversification Opportunities for Tesla and Tabcorp Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Tabcorp is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Tabcorp Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tabcorp Holdings 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 Tabcorp Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tabcorp Holdings has no effect on the direction of Tesla i.e., Tesla and Tabcorp Holdings go up and down completely randomly.
Pair Corralation between Tesla and Tabcorp Holdings
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.23 times more return on investment than Tabcorp Holdings. However, Tesla is 1.23 times more volatile than Tabcorp Holdings. It trades about 0.18 of its potential returns per unit of risk. Tabcorp Holdings is currently generating about 0.02 per unit of risk. If you would invest 21,321 in Tesla Inc on August 24, 2024 and sell it today you would earn a total of 12,643 from holding Tesla Inc or generate 59.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Tesla Inc vs. Tabcorp Holdings
Performance |
| Timeline |
| Tesla Inc |
| Tabcorp Holdings |
Tesla and Tabcorp Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Tabcorp Holdings
The main advantage of trading using opposite Tesla and Tabcorp Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Tabcorp Holdings 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 Tabcorp Holdings will offset losses from the drop in Tabcorp Holdings' long position.The idea behind Tesla Inc and Tabcorp Holdings 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.| Tabcorp Holdings vs. WiseTech Global Limited | Tabcorp Holdings vs. Macquarie Bank Limited | Tabcorp Holdings vs. Energy Technologies Limited | Tabcorp Holdings vs. Thorney Technologies |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |