Correlation Between Exxon and Tesla

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Exxon and Tesla 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 Exxon and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Tesla Inc CDR, you can compare the effects of market volatilities on Exxon and Tesla 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 Exxon with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Tesla.

Diversification Opportunities for Exxon and Tesla

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Exxon and Tesla is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Exxon 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 EXXON MOBIL CDR are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of Exxon i.e., Exxon and Tesla go up and down completely randomly.

Pair Corralation between Exxon and Tesla

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 1.6 times more return on investment than Tesla. However, Exxon is 1.6 times more volatile than Tesla Inc CDR. It trades about 0.04 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.06 per unit of risk. If you would invest  1,890  in EXXON MOBIL CDR on August 26, 2024 and sell it today you would earn a total of  393.00  from holding EXXON MOBIL CDR or generate 20.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

EXXON MOBIL CDR  vs.  Tesla Inc CDR

 Performance 
       Timeline  
EXXON MOBIL CDR 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in EXXON MOBIL CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Tesla Inc CDR 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Exxon and Tesla Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and Tesla

The main advantage of trading using opposite Exxon and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.
The idea behind EXXON MOBIL CDR and Tesla Inc CDR 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.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

Other Complementary Tools

Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
CEOs Directory
Screen CEOs from public companies around the world
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Commodity Directory
Find actively traded commodities issued by global exchanges