Correlation Between Fly E and Tesla

Can any of the company-specific risk be diversified away by investing in both Fly E 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 Fly E and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fly E Group, Common and Tesla Inc, you can compare the effects of market volatilities on Fly E 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 Fly E with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fly E and Tesla.

Diversification Opportunities for Fly E and Tesla

-0.67

Correlation Coefficient

Fly E  Tesla

Excellent diversification

The 3 months correlation between Fly and Tesla is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fly E Group, Common and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Fly E 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 Fly E Group, Common 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 has no effect on the direction of Fly E i.e., Fly E and Tesla go up and down completely randomly.

Pair Corralation between Fly E and Tesla

Given the investment horizon of 90 days Fly E Group, Common is expected to under-perform the Tesla. In addition to that, Fly E is 2.79 times more volatile than Tesla Inc. It trades about -0.09 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.34 per unit of volatility. If you would invest  32,849  in Tesla Inc on September 13, 2024 and sell it today you would earn a total of  7,250  from holding Tesla Inc or generate 22.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fly E Group, Common  vs.  Tesla Inc

Fly E Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fly E Group, Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fly E is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tesla Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fly E and Tesla

The main advantage of trading using opposite Fly E and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fly E 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 Fly E Group, Common and Tesla 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.