Correlation Between Tesla and Marcopolo

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

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

Diversification Opportunities for Tesla and Marcopolo

-0.4

Correlation Coefficient

Tesla  Marcopolo

Very good diversification

The 3 months correlation between Tesla and Marcopolo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA 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 Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Tesla i.e., Tesla and Marcopolo go up and down completely randomly.

Pair Corralation between Tesla and Marcopolo

Assuming the 90 days trading horizon Tesla Inc is expected to generate 2.65 times more return on investment than Marcopolo. However, Tesla is 2.65 times more volatile than Marcopolo SA. It trades about 0.1 of its potential returns per unit of risk. Marcopolo SA is currently generating about -0.19 per unit of risk. If you would invest  2,648  in Tesla Inc on February 3, 2024 and sell it today you would earn a total of  219.00  from holding Tesla Inc or generate 8.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tesla Inc  vs.  Marcopolo SA

Tesla Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tesla may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Marcopolo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marcopolo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Marcopolo 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 Marcopolo

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

The idea behind Tesla Inc and Marcopolo SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.