Correlation Between Lycos Energy and Tesla

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

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

Diversification Opportunities for Lycos Energy and Tesla

-0.71

Correlation Coefficient

Lycos Energy  Tesla

Pay attention - limited upside

The 3 months correlation between Lycos and Tesla is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lycos Energy and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Lycos Energy 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 Lycos Energy 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 CDR has no effect on the direction of Lycos Energy i.e., Lycos Energy and Tesla go up and down completely randomly.

Pair Corralation between Lycos Energy and Tesla

Assuming the 90 days horizon Lycos Energy is expected to generate 12.42 times more return on investment than Tesla. However, Lycos Energy is 12.42 times more volatile than Tesla Inc CDR. It trades about 0.05 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.06 per unit of risk. If you would invest  432.00  in Lycos Energy on October 23, 2024 and sell it today you would lose (187.00) from holding Lycos Energy or give up 43.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Lycos Energy  vs.  Tesla Inc CDR

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Tesla Inc CDR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lycos Energy and Tesla

The main advantage of trading using opposite Lycos Energy and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lycos Energy 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 Lycos Energy and Tesla Inc CDR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.