Correlation Between Arcimoto and Tesla

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

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

Diversification Opportunities for Arcimoto and Tesla

0.65

Correlation Coefficient

Arcimoto  Tesla

Poor diversification

The 3 months correlation between Arcimoto and Tesla is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arcimoto and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Arcimoto 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 Arcimoto are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Arcimoto i.e., Arcimoto and Tesla go up and down completely randomly.

Pair Corralation between Arcimoto and Tesla

Considering the 90-day investment horizon Arcimoto is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Arcimoto is 1.38 times less risky than Tesla. The stock trades about -0.24 of its potential returns per unit of risk. The Tesla Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  17,522  in Tesla Inc on January 29, 2024 and sell it today you would lose (693.00) from holding Tesla Inc or give up 3.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arcimoto  vs.  Tesla Inc

Arcimoto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcimoto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 latest abnormal performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Arcimoto and Tesla

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

The idea behind Arcimoto and Tesla Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.