Correlation Between Tesla and Universal

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

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

Diversification Opportunities for Tesla and Universal

0.15

Correlation Coefficient

Tesla  Universal

Average diversification

The 3 months correlation between Tesla and Universal is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Tesla i.e., Tesla and Universal go up and down completely randomly.

Pair Corralation between Tesla and Universal

Given the investment horizon of 90 days Tesla Inc is expected to generate 1.96 times more return on investment than Universal. However, Tesla is 1.96 times more volatile than Universal. It trades about 0.07 of its potential returns per unit of risk. Universal is currently generating about -0.06 per unit of risk. If you would invest  27,535  in Tesla Inc on May 6, 2025 and sell it today you would earn a total of  3,391  from holding Tesla Inc or generate 12.32% return on investment over 90 days.

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

Tesla Inc  vs.  Universal

Tesla Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Universal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tesla and Universal

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

The idea behind Tesla Inc and Universal 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.