Correlation Between Tesla and Chemours
Can any of the company-specific risk be diversified away by investing in both Tesla and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and The Chemours, you can compare the effects of market volatilities on Tesla and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Chemours.
Diversification Opportunities for Tesla and Chemours
Poor diversification
The 3 months correlation between Tesla and Chemours is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Tesla i.e., Tesla and Chemours go up and down completely randomly.
Pair Corralation between Tesla and Chemours
Assuming the 90 days trading horizon Tesla Inc is expected to generate 4.21 times more return on investment than Chemours. However, Tesla is 4.21 times more volatile than The Chemours. It trades about 0.23 of its potential returns per unit of risk. The Chemours is currently generating about 0.2 per unit of risk. If you would invest 497,231 in Tesla Inc on September 26, 2024 and sell it today you would earn a total of 425,844 from holding Tesla Inc or generate 85.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tesla Inc vs. The Chemours
Performance |
Timeline |
Tesla Inc |
Chemours |
Tesla and Chemours Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tesla and Chemours
The main advantage of trading using opposite Tesla and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.Tesla vs. McEwen Mining | Tesla vs. New Oriental Education | Tesla vs. Grupo Sports World | Tesla vs. Micron Technology |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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