Correlation Between Tesla and Rompetrol Rafi
Can any of the company-specific risk be diversified away by investing in both Tesla and Rompetrol Rafi 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 Rompetrol Rafi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Rompetrol Rafi, you can compare the effects of market volatilities on Tesla and Rompetrol Rafi 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 Rompetrol Rafi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Rompetrol Rafi.
Diversification Opportunities for Tesla and Rompetrol Rafi
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tesla and Rompetrol is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Rompetrol Rafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rompetrol Rafi 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 Rompetrol Rafi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rompetrol Rafi has no effect on the direction of Tesla i.e., Tesla and Rompetrol Rafi go up and down completely randomly.
Pair Corralation between Tesla and Rompetrol Rafi
Given the investment horizon of 90 days Tesla Inc is expected to generate 3.66 times more return on investment than Rompetrol Rafi. However, Tesla is 3.66 times more volatile than Rompetrol Rafi. It trades about 0.34 of its potential returns per unit of risk. Rompetrol Rafi is currently generating about -0.2 per unit of risk. If you would invest 21,797 in Tesla Inc on August 23, 2024 and sell it today you would earn a total of 12,406 from holding Tesla Inc or generate 56.92% 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. Rompetrol Rafi
Performance |
| Timeline |
| Tesla Inc |
| Rompetrol Rafi |
Tesla and Rompetrol Rafi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Rompetrol Rafi
The main advantage of trading using opposite Tesla and Rompetrol Rafi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Rompetrol Rafi 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 Rompetrol Rafi will offset losses from the drop in Rompetrol Rafi's long position.The idea behind Tesla Inc and Rompetrol Rafi 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.| Rompetrol Rafi vs. Safetech Innovations SA | Rompetrol Rafi vs. AROBS TRANSILVANIA SOFTWARE | Rompetrol Rafi vs. TRANSILVANIA INVESTMENTS ALLIANCE | Rompetrol Rafi vs. Biofarm Bucure |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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