Correlation Between Tesla and DocuSign

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

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

Diversification Opportunities for Tesla and DocuSign

0.92

Correlation Coefficient

Tesla  DocuSign

Almost no diversification

The 3 months correlation between Tesla and DocuSign is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and DocuSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DocuSign 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 DocuSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DocuSign has no effect on the direction of Tesla i.e., Tesla and DocuSign go up and down completely randomly.

Pair Corralation between Tesla and DocuSign

Assuming the 90 days trading horizon Tesla Inc is expected to generate 1.03 times more return on investment than DocuSign. However, Tesla is 1.03 times more volatile than DocuSign. It trades about 0.25 of its potential returns per unit of risk. DocuSign is currently generating about 0.22 per unit of risk. If you would invest  4,432  in Tesla Inc on September 27, 2024 and sell it today you would earn a total of  3,918  from holding Tesla Inc or generate 88.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tesla Inc  vs.  DocuSign

Tesla Inc

Risk-Adjusted Performance

19 of 100

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 weak essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

DocuSign

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DocuSign are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DocuSign sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and DocuSign

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

The idea behind Tesla Inc and DocuSign 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 Anywhere module to track or share privately all of your investments from the convenience of any device.