Correlation Between Tesla and Trip Group
Can any of the company-specific risk be diversified away by investing in both Tesla and Trip Group 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 Trip Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Trip Group Ltd, you can compare the effects of market volatilities on Tesla and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Trip Group.
Diversification Opportunities for Tesla and Trip Group
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesla and Trip is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Tesla i.e., Tesla and Trip Group go up and down completely randomly.
Pair Corralation between Tesla and Trip Group
Given the investment horizon of 90 days Tesla Inc is expected to generate 2.58 times more return on investment than Trip Group. However, Tesla is 2.58 times more volatile than Trip Group Ltd. It trades about 0.35 of its potential returns per unit of risk. Trip Group Ltd is currently generating about 0.12 per unit of risk. If you would invest 21,365 in Tesla Inc on August 24, 2024 and sell it today you would earn a total of 12,599 from holding Tesla Inc or generate 58.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Trip Group Ltd
Performance |
| Timeline |
| Tesla Inc |
| Trip Group |
Tesla and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Trip Group
The main advantage of trading using opposite Tesla and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.The idea behind Tesla Inc and Trip Group Ltd 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.| Trip Group vs. Expedia Group | Trip Group vs. Booking Holdings | Trip Group vs. Despegar Corp | Trip Group vs. Travel Leisure Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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