Correlation Between Tesla and FG Merger
Can any of the company-specific risk be diversified away by investing in both Tesla and FG Merger 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 FG Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and FG Merger Corp, you can compare the effects of market volatilities on Tesla and FG Merger 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 FG Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and FG Merger.
Diversification Opportunities for Tesla and FG Merger
Very good diversification
The 3 months correlation between Tesla and FGMCW is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and FG Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger Corp 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 FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger Corp has no effect on the direction of Tesla i.e., Tesla and FG Merger go up and down completely randomly.
Pair Corralation between Tesla and FG Merger
Given the investment horizon of 90 days Tesla is expected to generate 25.04 times less return on investment than FG Merger. But when comparing it to its historical volatility, Tesla Inc is 12.08 times less risky than FG Merger. It trades about 0.08 of its potential returns per unit of risk. FG Merger Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5.00 in FG Merger Corp on September 12, 2024 and sell it today you would earn a total of 5.00 from holding FG Merger Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 15.56% |
| Values | Daily Returns |
Tesla Inc vs. FG Merger Corp
Performance |
| Timeline |
| Tesla Inc |
| FG Merger Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tesla and FG Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and FG Merger
The main advantage of trading using opposite Tesla and FG Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, FG Merger 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 FG Merger will offset losses from the drop in FG Merger's long position.The idea behind Tesla Inc and FG Merger Corp 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.| FG Merger vs. Western Digital | FG Merger vs. Meiwu Technology Co | FG Merger vs. Arrow Electronics | FG Merger vs. CTS Corporation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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