Correlation Between GE Vernova and Tesla

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

Diversification Opportunities for GE Vernova and Tesla

GEVTeslaDiversified AwayGEVTeslaDiversified Away100%
0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GEV and Tesla is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Tesla go up and down completely randomly.

Pair Corralation between GE Vernova and Tesla

Considering the 90-day investment horizon GE Vernova is expected to generate 2.0 times less return on investment than Tesla. But when comparing it to its historical volatility, GE Vernova LLC is 1.78 times less risky than Tesla. It trades about 0.22 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  22,787  in Tesla Inc on September 17, 2024 and sell it today you would earn a total of  20,836  from holding Tesla Inc or generate 91.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

GE Vernova LLC  vs.  Tesla Inc

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 010203040506070
JavaScript chart by amCharts 3.21.15GEV TSLA
       Timeline  
GE Vernova LLC 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec260280300320340360
Tesla Inc 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec250300350400

GE Vernova and Tesla Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.85-5.88-3.91-1.940.03752.214.466.78.95 0.020.030.040.05
JavaScript chart by amCharts 3.21.15GEV TSLA
       Returns  

Pair Trading with GE Vernova and Tesla

The main advantage of trading using opposite GE Vernova and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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 GE Vernova LLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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