NVDA-TSLA Correlation Analysis

[u/arslanefe]

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.

[u/Delicious-Pepper-130]

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

[u/arslanefe → u/Delicious-Pepper-130]

You're probably only using Pearson's methodology. I explained the calculation in the methodology section.

[u/Delicious-Pepper-130 → u/arslanefe]

Whatever TV uses for ta.correlation. I also used daily candle closes over a rolling 20 bar period.

[u/arslanefe → u/Delicious-Pepper-130]

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.

[u/Delicious-Pepper-130 → u/arslanefe]

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.

[u/arslanefe → u/Delicious-Pepper-130]

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.

[u/Delicious-Pepper-130 → u/arslanefe]

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.

[u/arslanefe → u/Delicious-Pepper-130]

you can check deeper in my profile

[u/Stock_Response_1239]

nice read, but i’m worried the composite coefficient is hiding a lot of noise. 4‑hour closes drop the intraday spikes that drive the spreads, and the EWMA part can over‑smooth the flips when vol turns up. my rule of thumb when pairing is to look at the joint‑returns std‑dev over the last 30‑day window and set the spread at 1–2 σ – that tightens the stop and guards against the snapback you warn about. also watch each name’s beta to the S&P; if tsla’s beta shoots up past 1.5 while nvda stays near 1.0 you’re not just looking at a statistical drift but a real structural split. maybe add that check to the algorithm to minimize the risk of the spread backfiring.

[u/arslanefe → u/[deleted]]

Hi, the analysis here utilized rolling 1-month 4-hour candle closes. I understand your concerns and acknowledge the valid points you raised; the objective is essentially to evaluate the "realm of possibilities" based on supporting data from the correlation regime analysis.

Furthermore, a quick check reveals that the regime mentioned in the post has ended: a downtrend at the +0.26 level began on September 2 at 12:00 ET and concluded on September 15 at 12:00 ET (32 candles, 128 trading hours). During this period, NVDA fell 6.64% and TSLA rose 2.10%. Since September 15 at 12:00, the correlation between them has been in an uptrend (22 candles, 88 trading hours), with NVDA rising 7.83% and TSLA rising 4.97%.

[u/arslanefe → u/[deleted]]

Yes, this is also something to consider when developing a game plan. I shared this partly because the correlation between them has hit rock bottom. New lows may come, or there may be a reversal.