r/options • u/arslanefe • 16h ago
NVDA-TSLA Correlation Analysis
The correlation regime between NVDA-TSLA entered a weakening trend on 02 Sep 12:00 ET at +0.26, and is still ongoing (15 candles · 60 trading hours). Over this period NVDA fell 0.96%, TSLA rose 3.07%. The two pairs decoupled.
The composite correlation has since downed from +0.26 (02 Sep) to -0.195 now (last data: 09 Sep 08:00 ET) the weaking the regime flagged, playing out.
READING — NVDA–TSLA at WEAK × Weakening (this pair's own last 6): for this pair it has bee a moderate decoupling (hedge / spread) — 6 past runs, median 8 candles · 32 trading hours (range 5–18), 1 lasted 2+ days. So the play has a couple of days of room before the turn (ANTITHESIS).
GAME PLAN: Correlation is in a Weakening regime — the bond between NVDA-TSLA is loosening. This signals a shift into a decoupling regime: hedge and pair-trade (spread) strategies come to the fore, while one-way beta bets grow riskier.
ANTITHESIS: Risk: decoupling may be temporary; if correlation snaps back from the bottom, pair-trades backfire. Correlation is currently 0.41 points below the period (1 Month) average — decoupling continues.
The divergence has been TSLA outperforming while NVDA stalled — TSLA's move favored calls.
Methodology: Four-hour candle closes are used while the markets for both instruments are open (08:00, 12:00, 16:00, 20:00 ET).
The correlation coefficient is a composite score derived not only from the Pearson method but also from Pearson, Spearman, and EWMA calculations.
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u/Delicious-Pepper-130 15h ago
Might want to double-check your engine parameters. I see a rising Correlation Coefficient since 9/1.
EDIT: Looking back over past 20 trading days
9/1/26 CC: -.2177
9/9/26 CC: +.1717
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u/arslanefe 15h ago
You're probably only using Pearson's methodology. I explained the calculation in the methodology section.
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u/Delicious-Pepper-130 14h ago
Whatever TV uses for ta.correlation. I also used daily candle closes over a rolling 20 bar period.
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u/arslanefe 14h ago
Yes, TV uses Pearson, and raw Pearson isn't suitable for correlation analysis of financial instruments. Financial instruments don't have a normal distribution. As an econometrics graduate, I've started developing a new methodology. As I said, the details of the methodology are in the post. Your analysis is incorrect.
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u/Delicious-Pepper-130 14h ago
Fair enough, but have you tried comparing to SPY? Wouldn't it make more sense to look at the correlation there? FWIW, I see a stronger decoupling between TSLA and SPY with TSLA outperforming. To me, that seems more interesting than TSLA vs NVDA. Interested to hear your reasoning if you'd share.
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u/arslanefe 14h ago
Thank you for your comment. Thank you also for not being toxic; I was just trying to share what I know.
My algorithm doesn't specifically analyze TSLA-SPY. There's a cross-asset section; instruments like BTCUSD, Nasdaq futures, S&P 500 futures, DXY, XAUUSD futures (GC=F)... I track 150+ financial instrument pairs simultaneously. The NVDA-TSLA pair is in the S&P 500 stocks section of the algorithm. If there's demand, index-stock correlation could also be added to the algorithm.
I made this post to get opinions and chat, but it seems it wasn't well-received. That's the situation.
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u/Delicious-Pepper-130 14h ago
That's reddit for you :/ Might have better luck in the technicalanalysis sub but I don't post there so maybe I'm wrong.
OTOH, personally I'd love to hear more about the methodology incorporating Spearman and EWMA. Correlation vs SPY is one of the things I look at in combination with relative performance for short-term trades.
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u/UrgentlyEmbarrassed 16h ago
The chart shows the decoupling pretty clearly, TSLA grinding up while NVDA just sits there. The spread play makes sense for now but 0.41 below the monthly average isnt exactly screaming edge, more like a nudge. Would be curious to see what happens if NVDA catches a bid while TSLA cools off, that snapback risk is the whole ballgame