Correlation Between Tesla and WEG SA
Can any of the company-specific risk be diversified away by investing in both Tesla and WEG 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 WEG 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 WEG SA, you can compare the effects of market volatilities on Tesla and WEG 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 WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and WEG SA.
Diversification Opportunities for Tesla and WEG SA
Weak diversification
The 3 months correlation between Tesla and WEG is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG 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 WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of Tesla i.e., Tesla and WEG SA go up and down completely randomly.
Pair Corralation between Tesla and WEG SA
Assuming the 90 days trading horizon Tesla Inc is expected to generate 2.71 times more return on investment than WEG SA. However, Tesla is 2.71 times more volatile than WEG SA. It trades about 0.38 of its potential returns per unit of risk. WEG SA is currently generating about 0.23 per unit of risk. If you would invest 6,250 in Tesla Inc on September 25, 2024 and sell it today you would earn a total of 2,100 from holding Tesla Inc or generate 33.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tesla Inc vs. WEG SA
Performance |
| Timeline |
| Tesla Inc |
| WEG SA |
Tesla and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and WEG SA
The main advantage of trading using opposite Tesla and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, WEG 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 WEG SA will offset losses from the drop in WEG SA's long position.| Tesla vs. Marcopolo SA | Tesla vs. Randon SA Implementos | Tesla vs. Fras le SA | Tesla vs. Indstrias Romi SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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