Correlation Between Vanguard FTSE and Tesla

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Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Tesla 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 Vanguard FTSE and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE All World and Tesla Inc, you can compare the effects of market volatilities on Vanguard FTSE and Tesla 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 Vanguard FTSE with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Tesla.

Diversification Opportunities for Vanguard FTSE and Tesla

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Vanguard and Tesla is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All-World and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Vanguard FTSE 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 Vanguard FTSE All World are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Tesla go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Tesla

Considering the 90-day investment horizon Vanguard FTSE All World is expected to generate 0.29 times more return on investment than Tesla. However, Vanguard FTSE All World is 3.5 times less risky than Tesla. It trades about 0.02 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.02 per unit of risk. If you would invest  5,341  in Vanguard FTSE All World on December 29, 2023 and sell it today you would earn a total of  527.00  from holding Vanguard FTSE All World or generate 9.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vanguard FTSE All-World  vs.  Tesla Inc

 Performance 
       Timeline  
Vanguard FTSE All-World 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE All World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Tesla Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Vanguard FTSE and Tesla Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard FTSE and Tesla

The main advantage of trading using opposite Vanguard FTSE and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.
The idea behind Vanguard FTSE All World and Tesla Inc 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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