Correlation Between Tesla and Brunswick
Can any of the company-specific risk be diversified away by investing in both Tesla and Brunswick 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 Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Brunswick, you can compare the effects of market volatilities on Tesla and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Brunswick.
Diversification Opportunities for Tesla and Brunswick
Modest diversification
The 3 months correlation between Tesla and Brunswick is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Tesla i.e., Tesla and Brunswick go up and down completely randomly.
Pair Corralation between Tesla and Brunswick
Given the investment horizon of 90 days Tesla Inc is expected to generate 2.31 times more return on investment than Brunswick. However, Tesla is 2.31 times more volatile than Brunswick. It trades about 0.26 of its potential returns per unit of risk. Brunswick is currently generating about 0.12 per unit of risk. If you would invest 26,251 in Tesla Inc on August 28, 2024 and sell it today you would earn a total of 7,608 from holding Tesla Inc or generate 28.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Brunswick
Performance |
| Timeline |
| Tesla Inc |
| Brunswick |
Tesla and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Brunswick
The main advantage of trading using opposite Tesla and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.The idea behind Tesla Inc and Brunswick 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.| Brunswick vs. MCBC Holdings | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries | Brunswick vs. Thor Industries |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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