Correlation Between European Wax and Tesla
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Tesla Inc, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Tesla.
Diversification Opportunities for European Wax and Tesla
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Tesla is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Tesla go up and down completely randomly.
Pair Corralation between European Wax and Tesla
Given the investment horizon of 90 days European Wax is expected to generate 5.28 times less return on investment than Tesla. In addition to that, European Wax is 1.35 times more volatile than Tesla Inc. It trades about 0.08 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.6 per unit of volatility. If you would invest 33,874 in Tesla Inc on September 18, 2024 and sell it today you would earn a total of 14,112 from holding Tesla Inc or generate 41.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Tesla Inc
Performance |
| Timeline |
| European Wax Center |
| Tesla Inc |
European Wax and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Tesla
The main advantage of trading using opposite European Wax and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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