Correlation Between Arena Fortify and Tesla

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

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

Diversification Opportunities for Arena Fortify and Tesla

-0.31

Correlation Coefficient

Arena Fortify  Tesla

Very good diversification

The 3 months correlation between Arena and Tesla is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Arena Fortify Acquisition and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Arena Fortify 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 Arena Fortify Acquisition 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 has no effect on the direction of Arena Fortify i.e., Arena Fortify and Tesla go up and down completely randomly.

Pair Corralation between Arena Fortify and Tesla

If you would invest  14,205  in Tesla Inc on February 22, 2024 and sell it today you would earn a total of  3,806  from holding Tesla Inc or generate 26.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.35%
Values	Daily Returns

Arena Fortify Acquisition  vs.  Tesla Inc

Arena Fortify Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arena Fortify Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arena Fortify is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tesla Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Arena Fortify and Tesla

The main advantage of trading using opposite Arena Fortify and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arena Fortify 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 Arena Fortify Acquisition and Tesla Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.