Correlation Between Tesla and First National

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

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

Diversification Opportunities for Tesla and First National

0.61

Correlation Coefficient

Tesla  First National

Poor diversification

The 3 months correlation between Tesla and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 CDR are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Tesla i.e., Tesla and First National go up and down completely randomly.

Pair Corralation between Tesla and First National

Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 2.76 times more return on investment than First National. However, Tesla is 2.76 times more volatile than First National Financial. It trades about 0.14 of its potential returns per unit of risk. First National Financial is currently generating about 0.17 per unit of risk. If you would invest  2,252  in Tesla Inc CDR on April 23, 2025 and sell it today you would earn a total of  713.00  from holding Tesla Inc CDR or generate 31.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Tesla Inc CDR  vs.  First National Financial

Tesla Inc CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

First National Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, First National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and First National

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

The idea behind Tesla Inc CDR and First National Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.