Correlation Between Tesla and Arcimoto
Can any of the company-specific risk be diversified away by investing in both Tesla and Arcimoto 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 Arcimoto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Arcimoto, you can compare the effects of market volatilities on Tesla and Arcimoto 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 Arcimoto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Arcimoto.
Diversification Opportunities for Tesla and Arcimoto
Very poor diversification
The 3 months correlation between Tesla and Arcimoto is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Arcimoto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcimoto 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 Arcimoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcimoto has no effect on the direction of Tesla i.e., Tesla and Arcimoto go up and down completely randomly.
Pair Corralation between Tesla and Arcimoto
Given the investment horizon of 90 days Tesla Inc is expected to generate 0.97 times more return on investment than Arcimoto. However, Tesla Inc is 1.04 times less risky than Arcimoto. It trades about -0.26 of its potential returns per unit of risk. Arcimoto is currently generating about -0.31 per unit of risk. If you would invest 17,566 in Tesla Inc on January 20, 2024 and sell it today you would lose (2,573) from holding Tesla Inc or give up 14.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Tesla Inc vs. Arcimoto
Performance |
Timeline |
Tesla Inc |
Arcimoto |
Tesla and Arcimoto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tesla and Arcimoto
The main advantage of trading using opposite Tesla and Arcimoto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Arcimoto 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 Arcimoto will offset losses from the drop in Arcimoto's long position.The idea behind Tesla Inc and Arcimoto 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.Arcimoto vs. Ford Motor | Arcimoto vs. General Motors | Arcimoto vs. Goodyear Tire Rubber | Arcimoto vs. Li AutoInc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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