Correlation Between Tesla and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both Tesla and Apogee Enterprises 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 Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Apogee Enterprises, you can compare the effects of market volatilities on Tesla and Apogee Enterprises 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 Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Apogee Enterprises.
Diversification Opportunities for Tesla and Apogee Enterprises
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Apogee is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises 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 Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Tesla i.e., Tesla and Apogee Enterprises go up and down completely randomly.
Pair Corralation between Tesla and Apogee Enterprises
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.81 times more return on investment than Apogee Enterprises. However, Tesla is 1.81 times more volatile than Apogee Enterprises. It trades about 0.05 of its potential returns per unit of risk. Apogee Enterprises is currently generating about 0.07 per unit of risk. If you would invest 17,404 in Tesla Inc on August 28, 2024 and sell it today you would earn a total of 16,455 from holding Tesla Inc or generate 94.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Apogee Enterprises
Performance |
| Timeline |
| Tesla Inc |
| Apogee Enterprises |
Tesla and Apogee Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Apogee Enterprises
The main advantage of trading using opposite Tesla and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.The idea behind Tesla Inc and Apogee Enterprises 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.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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