Correlation Between Tesla and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Tesla and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Voestalpine AG, you can compare the effects of market volatilities on Tesla and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Voestalpine.
Diversification Opportunities for Tesla and Voestalpine
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tesla and Voestalpine is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of Tesla i.e., Tesla and Voestalpine go up and down completely randomly.
Pair Corralation between Tesla and Voestalpine
Given the investment horizon of 90 days Tesla Inc is expected to generate 3.12 times more return on investment than Voestalpine. However, Tesla is 3.12 times more volatile than Voestalpine AG. It trades about 0.35 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.17 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Voestalpine AG
Performance |
| Timeline |
| Tesla Inc |
| Voestalpine AG |
Tesla and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Voestalpine
The main advantage of trading using opposite Tesla and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.The idea behind Tesla Inc and Voestalpine AG 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.| Voestalpine vs. OMV Aktiengesellschaft | Voestalpine vs. Raiffeisen Bank International | Voestalpine vs. Andritz AG | Voestalpine vs. VERBUND AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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