Correlation Between Tesla and Blackrock Corporate

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

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

Diversification Opportunities for Tesla and Blackrock Corporate

-0.7

Correlation Coefficient

Tesla  Blackrock Corporate

Excellent diversification

The 3 months correlation between Tesla and Blackrock is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Blackrock Corporate High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Corporate High 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 Blackrock Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Corporate High has no effect on the direction of Tesla i.e., Tesla and Blackrock Corporate go up and down completely randomly.

Pair Corralation between Tesla and Blackrock Corporate

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Blackrock Corporate. In addition to that, Tesla is 3.64 times more volatile than Blackrock Corporate High. It trades about -0.12 of its total potential returns per unit of risk. Blackrock Corporate High is currently generating about -0.26 per unit of volatility. If you would invest  966.00  in Blackrock Corporate High on January 16, 2024 and sell it today you would lose (40.00) from holding Blackrock Corporate High or give up 4.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Tesla Inc  vs.  Blackrock Corporate High

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 unsteady performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Blackrock Corporate High

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Blackrock Corporate High has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Blackrock Corporate is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tesla and Blackrock Corporate

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

The idea behind Tesla Inc and Blackrock Corporate High 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.