Correlation Between Tesla and Sinclair Broadcast

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

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

Diversification Opportunities for Tesla and Sinclair Broadcast

0.7

Correlation Coefficient

Tesla  Sinclair Broadcast

Poor diversification

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

Pair Corralation between Tesla and Sinclair Broadcast

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Sinclair Broadcast. But the stock apears to be less risky and, when comparing its historical volatility, Tesla Inc is 1.25 times less risky than Sinclair Broadcast. The stock trades about -0.26 of its potential returns per unit of risk. The Sinclair Broadcast Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,214  in Sinclair Broadcast Group on January 20, 2024 and sell it today you would lose (4.00) from holding Sinclair Broadcast Group or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Tesla Inc  vs.  Sinclair Broadcast Group

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 abnormal 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.

Sinclair Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinclair Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tesla and Sinclair Broadcast

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

The idea behind Tesla Inc and Sinclair Broadcast Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.