Correlation Between Tesla and OFX Group

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

By analyzing existing cross correlation between Tesla Inc and OFX Group Ltd, you can compare the effects of market volatilities on Tesla and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and OFX Group.

Diversification Opportunities for Tesla and OFX Group

-0.41

Correlation Coefficient

Tesla  OFX Group

Very good diversification

The 3 months correlation between Tesla and OFX is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Tesla i.e., Tesla and OFX Group go up and down completely randomly.

Pair Corralation between Tesla and OFX Group

Given the investment horizon of 90 days Tesla Inc is expected to generate 0.48 times more return on investment than OFX Group. However, Tesla Inc is 2.08 times less risky than OFX Group. It trades about 0.19 of its potential returns per unit of risk. OFX Group Ltd is currently generating about 0.04 per unit of risk. If you would invest  25,427  in Tesla Inc on September 24, 2024 and sell it today you would earn a total of  16,679  from holding Tesla Inc or generate 65.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Tesla Inc  vs.  OFX Group Ltd

Tesla Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 14 (%) 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.

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and OFX Group

The main advantage of trading using opposite Tesla and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.

The idea behind Tesla Inc and OFX Group Ltd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.