Correlation Between Tesla and Bang Olufsen
Can any of the company-specific risk be diversified away by investing in both Tesla and Bang Olufsen 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 Bang Olufsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Bang Olufsen, you can compare the effects of market volatilities on Tesla and Bang Olufsen 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 Bang Olufsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Bang Olufsen.
Diversification Opportunities for Tesla and Bang Olufsen
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Bang is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen 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 Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of Tesla i.e., Tesla and Bang Olufsen go up and down completely randomly.
Pair Corralation between Tesla and Bang Olufsen
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Bang Olufsen. In addition to that, Tesla is 1.87 times more volatile than Bang Olufsen. It trades about -0.28 of its total potential returns per unit of risk. Bang Olufsen is currently generating about 0.12 per unit of volatility. If you would invest 916.00 in Bang Olufsen on January 25, 2024 and sell it today you would earn a total of 29.00 from holding Bang Olufsen or generate 3.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 90.48% |
Values | Daily Returns |
Tesla Inc vs. Bang Olufsen
Performance |
Timeline |
Tesla Inc |
Bang Olufsen |
Tesla and Bang Olufsen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tesla and Bang Olufsen
The main advantage of trading using opposite Tesla and Bang Olufsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Bang Olufsen 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 Bang Olufsen will offset losses from the drop in Bang Olufsen's long position.The idea behind Tesla Inc and Bang Olufsen 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |