Correlation Between Tesla and Kering SA
Can any of the company-specific risk be diversified away by investing in both Tesla and Kering SA 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 Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Kering SA, you can compare the effects of market volatilities on Tesla and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Kering SA.
Diversification Opportunities for Tesla and Kering SA
Excellent diversification
The 3 months correlation between Tesla and Kering is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Tesla i.e., Tesla and Kering SA go up and down completely randomly.
Pair Corralation between Tesla and Kering SA
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.71 times more return on investment than Kering SA. However, Tesla is 1.71 times more volatile than Kering SA. It trades about 0.09 of its potential returns per unit of risk. Kering SA is currently generating about -0.14 per unit of risk. If you would invest 20,188 in Tesla Inc on August 27, 2024 and sell it today you would earn a total of 15,068 from holding Tesla Inc or generate 74.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Kering SA
Performance |
| Timeline |
| Tesla Inc |
| Kering SA |
Tesla and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Kering SA
The main advantage of trading using opposite Tesla and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.The idea behind Tesla Inc and Kering SA 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.| Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA vs. Prada Spa PK | Kering SA vs. Compagnie Financire Richemont |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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