Correlation Between Xos Equity and Tesla

Can any of the company-specific risk be diversified away by investing in both Xos Equity 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 Xos Equity and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xos Equity Warrants and Tesla Inc, you can compare the effects of market volatilities on Xos Equity 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 Xos Equity with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos Equity and Tesla.

Diversification Opportunities for Xos Equity and Tesla

-0.75

Correlation Coefficient

Xos Equity  Tesla

Pay attention - limited upside

The 3 months correlation between Xos and Tesla is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Xos Equity 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 Xos Equity Warrants 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 Xos Equity i.e., Xos Equity and Tesla go up and down completely randomly.

Pair Corralation between Xos Equity and Tesla

Assuming the 90 days horizon Xos Equity Warrants is expected to under-perform the Tesla. In addition to that, Xos Equity is 3.2 times more volatile than Tesla Inc. It trades about -0.11 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.19 per unit of volatility. If you would invest  21,060  in Tesla Inc on September 1, 2024 and sell it today you would earn a total of  13,456  from holding Tesla Inc or generate 63.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Xos Equity Warrants  vs.  Tesla Inc

Xos Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Tesla Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xos Equity and Tesla

The main advantage of trading using opposite Xos Equity and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos Equity 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 Xos Equity Warrants 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.