Correlation Between Tesla and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Tesla and Natural Alternatives 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 Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Natural Alternatives International, you can compare the effects of market volatilities on Tesla and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Natural Alternatives.
Diversification Opportunities for Tesla and Natural Alternatives
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and Natural is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Tesla i.e., Tesla and Natural Alternatives go up and down completely randomly.
Pair Corralation between Tesla and Natural Alternatives
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.22 times more return on investment than Natural Alternatives. However, Tesla is 1.22 times more volatile than Natural Alternatives International. It trades about 0.06 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.02 per unit of risk. If you would invest 21,927 in Tesla Inc on September 1, 2024 and sell it today you would earn a total of 12,589 from holding Tesla Inc or generate 57.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Natural Alternatives Internati
Performance |
| Timeline |
| Tesla Inc |
| Natural Alternatives |
Tesla and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Natural Alternatives
The main advantage of trading using opposite Tesla and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.The idea behind Tesla Inc and Natural Alternatives International 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.| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Lifeway Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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