Correlation Between Thunderbird Entertainment and Tesla

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

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

Diversification Opportunities for Thunderbird Entertainment and Tesla

-0.34

Correlation Coefficient

Thunderbird Entertainment  Tesla

Very good diversification

The 3 months correlation between Thunderbird and Tesla is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thunderbird Entertainment Grou 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 Thunderbird Entertainment 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 Thunderbird Entertainment Group 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 Thunderbird Entertainment i.e., Thunderbird Entertainment and Tesla go up and down completely randomly.

Pair Corralation between Thunderbird Entertainment and Tesla

Assuming the 90 days trading horizon Thunderbird Entertainment is expected to generate 18.08 times less return on investment than Tesla. But when comparing it to its historical volatility, Thunderbird Entertainment Group is 1.67 times less risky than Tesla. It trades about 0.02 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,082  in Tesla Inc CDR on September 17, 2024 and sell it today you would earn a total of  1,888  from holding Tesla Inc CDR or generate 90.68% return on investment over 90 days.

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

Thunderbird Entertainment Grou  vs.  Tesla Inc CDR

Thunderbird Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thunderbird Entertainment Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Thunderbird Entertainment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tesla Inc CDR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thunderbird Entertainment and Tesla

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

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.