Correlation Between Winnebago Industries and Tesla

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

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

Diversification Opportunities for Winnebago Industries and Tesla

0.22

Correlation Coefficient

Winnebago Industries  Tesla

Modest diversification

The 3 months correlation between Winnebago and Tesla is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Winnebago Industries and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Winnebago Industries 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 Winnebago Industries 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 Winnebago Industries i.e., Winnebago Industries and Tesla go up and down completely randomly.

Pair Corralation between Winnebago Industries and Tesla

Considering the 90-day investment horizon Winnebago Industries is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Winnebago Industries is 1.89 times less risky than Tesla. The stock trades about -0.19 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  33,024  in Tesla Inc on September 14, 2024 and sell it today you would earn a total of  8,786  from holding Tesla Inc or generate 26.6% return on investment over 90 days.

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

Winnebago Industries  vs.  Tesla Inc

Winnebago Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Winnebago Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Winnebago Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Tesla Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 18 (%) 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 Winnebago Industries and Tesla

The main advantage of trading using opposite Winnebago Industries and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winnebago Industries 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 Winnebago Industries 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.