Correlation Between Tesla and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both Tesla and Virtus ETF 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 Virtus ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Virtus ETF Trust, you can compare the effects of market volatilities on Tesla and Virtus ETF 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Virtus ETF.
Diversification Opportunities for Tesla and Virtus ETF
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Virtus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Tesla i.e., Tesla and Virtus ETF go up and down completely randomly.
Pair Corralation between Tesla and Virtus ETF
Given the investment horizon of 90 days Tesla Inc is expected to generate 20.48 times more return on investment than Virtus ETF. However, Tesla is 20.48 times more volatile than Virtus ETF Trust. It trades about 0.05 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.21 per unit of risk. If you would invest 17,982 in Tesla Inc on August 27, 2024 and sell it today you would earn a total of 17,274 from holding Tesla Inc or generate 96.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Virtus ETF Trust
Performance |
| Timeline |
| Tesla Inc |
| Virtus ETF Trust |
Tesla and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Virtus ETF
The main advantage of trading using opposite Tesla and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Virtus ETF 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 Virtus ETF will offset losses from the drop in Virtus ETF's long position.The idea behind Tesla Inc and Virtus ETF Trust 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.| Virtus ETF vs. Franklin Liberty Senior | Virtus ETF vs. Virtus Newfleet Multi Sector | Virtus ETF vs. Pacer Pacific Asset | Virtus ETF vs. JPMorgan USD Emerging |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |