Correlation Between Tesla and Melexis NV
Can any of the company-specific risk be diversified away by investing in both Tesla and Melexis NV 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 Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Melexis NV, you can compare the effects of market volatilities on Tesla and Melexis NV 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 Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Melexis NV.
Diversification Opportunities for Tesla and Melexis NV
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tesla and Melexis is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Tesla i.e., Tesla and Melexis NV go up and down completely randomly.
Pair Corralation between Tesla and Melexis NV
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.52 times more return on investment than Melexis NV. However, Tesla is 1.52 times more volatile than Melexis NV. It trades about 0.14 of its potential returns per unit of risk. Melexis NV is currently generating about -0.08 per unit of risk. If you would invest 17,629 in Tesla Inc on September 1, 2024 and sell it today you would earn a total of 16,887 from holding Tesla Inc or generate 95.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Tesla Inc vs. Melexis NV
Performance |
| Timeline |
| Tesla Inc |
| Melexis NV |
Tesla and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Melexis NV
The main advantage of trading using opposite Tesla and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.The idea behind Tesla Inc and Melexis NV 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.| Melexis NV vs. Power Integrations | Melexis NV vs. MACOM Technology Solutions | Melexis NV vs. Intchains Group Limited | Melexis NV vs. Vishay Intertechnology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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