Correlation Between Tesla and G III
Can any of the company-specific risk be diversified away by investing in both Tesla and G III 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 G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and G III Apparel Group, you can compare the effects of market volatilities on Tesla and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and G III.
Diversification Opportunities for Tesla and G III
Modest diversification
The 3 months correlation between Tesla and GIII is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Tesla i.e., Tesla and G III go up and down completely randomly.
Pair Corralation between Tesla and G III
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.35 times more return on investment than G III. However, Tesla is 1.35 times more volatile than G III Apparel Group. It trades about 0.17 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.06 per unit of risk. If you would invest 22,032 in Tesla Inc on August 23, 2024 and sell it today you would earn a total of 11,932 from holding Tesla Inc or generate 54.16% 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. G III Apparel Group
Performance |
| Timeline |
| Tesla Inc |
| G III Apparel |
Tesla and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and G III
The main advantage of trading using opposite Tesla and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.The idea behind Tesla Inc and G III Apparel Group 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.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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