Correlation Between Lifevantage and Tesla

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

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

Diversification Opportunities for Lifevantage and Tesla

0.88

Correlation Coefficient

Lifevantage  Tesla

Very poor diversification

The 3 months correlation between Lifevantage and Tesla is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Lifevantage 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 Lifevantage 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 Lifevantage i.e., Lifevantage and Tesla go up and down completely randomly.

Pair Corralation between Lifevantage and Tesla

Given the investment horizon of 90 days Lifevantage is expected to generate 1.31 times less return on investment than Tesla. In addition to that, Lifevantage is 1.41 times more volatile than Tesla Inc. It trades about 0.19 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.35 per unit of volatility. If you would invest  33,859  in Tesla Inc on September 24, 2024 and sell it today you would earn a total of  9,201  from holding Tesla Inc or generate 27.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Lifevantage  vs.  Tesla Inc

Lifevantage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) 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 Lifevantage and Tesla

The main advantage of trading using opposite Lifevantage and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage 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 Lifevantage 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.