Correlation Between Tesla and PACIFIC

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

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

Diversification Opportunities for Tesla and PACIFIC

-0.35

Correlation Coefficient

Tesla  PACIFIC

Very good diversification

The 3 months correlation between Tesla and PACIFIC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Tesla i.e., Tesla and PACIFIC go up and down completely randomly.

Pair Corralation between Tesla and PACIFIC

Given the investment horizon of 90 days Tesla is expected to generate 10.78 times less return on investment than PACIFIC. But when comparing it to its historical volatility, Tesla Inc is 17.49 times less risky than PACIFIC. It trades about 0.09 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,576  in PACIFIC GAS AND on September 23, 2024 and sell it today you would earn a total of  528.00  from holding PACIFIC GAS AND or generate 6.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Tesla Inc  vs.  PACIFIC GAS AND

Tesla Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) 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.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and PACIFIC

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

The idea behind Tesla Inc and PACIFIC GAS AND 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.