Is TSLA actually a reflation / commodity-style trade?
מעודכן
The correlation between TSLA prices and lithium prices is remarkable (we are using the stock prices of two lithium miners with low diversification as a proxy- so more diversified Albermarle is not included - which is obviously an imperfect proxy). Movements in the price of the largest US-focused lithium miner LTHM explain 79% of the variation in TSLA's price since 2018. imgur.com/a/lhoqUR1 (Linear Regression Analysis)
A cross correlation analysis suggests no consistent lag between and TSLA. This means that current day (and current week) LTHM movement correlates best with TSLA. So it's not really TSLA driving LTHM, or vice versa.
1. Weekly returns were aggregated and compared, and the Pearson Correlation actually suggests that prior week LTHM return has some predictive value for TSLA current week returns. imgur.com/a/aAUCcGX. The volatility of returns as a % make linear regression a sub-optimal tool to use here. We used binary logistic regression which somewhat confirmed these conclusions (71% accuracy).
2. We looked to see if variations in the 10yr yield explained variations in TSLA's stock price (making TSLA more like a tech company) and perhaps then affected lithium producers downstream. We found that, prior to 2020, the Pearson correlation between TSLA and TNX was positive (0.36); in early 2020, it was negative (-0.42 yields fell and TSLA rose out of the March lows) and, since August, strongly positive (0.86). I included a more traditional tech company (AMZN) for comparison which clearly has a negative relationship with 10-year yields throughout nearly all periods.
3. The visual chart shows a number of continuation patterns ("pauses") since the March 2020 lows. In most instances, TSLA and LTHM corrections & consolidations occur simultaneously, and in the vast majority of instances, LTHM topped slightly prior to TSLA.
4. All 3 assets show hammer reversal-type patterns within falling wedges that are quite similar to many previous iterations that resolved bullishly.
Until further notice, TSLA, LTHM, and another US-based lithium producer (LAC) appear to be ending yet another falling wedge pattern to reverse to bullish upside. And, thus, I am cautiously bullish on all 3. However, for me, LTHM's breakout appears slightly stronger than that of the other two, so I consider it the preferred trade. LAC could be the highest upside trade of the 3 given its outperformance of the other two since the March lows.
A cross correlation analysis suggests no consistent lag between and TSLA. This means that current day (and current week) LTHM movement correlates best with TSLA. So it's not really TSLA driving LTHM, or vice versa.
1. Weekly returns were aggregated and compared, and the Pearson Correlation actually suggests that prior week LTHM return has some predictive value for TSLA current week returns. imgur.com/a/aAUCcGX. The volatility of returns as a % make linear regression a sub-optimal tool to use here. We used binary logistic regression which somewhat confirmed these conclusions (71% accuracy).
2. We looked to see if variations in the 10yr yield explained variations in TSLA's stock price (making TSLA more like a tech company) and perhaps then affected lithium producers downstream. We found that, prior to 2020, the Pearson correlation between TSLA and TNX was positive (0.36); in early 2020, it was negative (-0.42 yields fell and TSLA rose out of the March lows) and, since August, strongly positive (0.86). I included a more traditional tech company (AMZN) for comparison which clearly has a negative relationship with 10-year yields throughout nearly all periods.
3. The visual chart shows a number of continuation patterns ("pauses") since the March 2020 lows. In most instances, TSLA and LTHM corrections & consolidations occur simultaneously, and in the vast majority of instances, LTHM topped slightly prior to TSLA.
4. All 3 assets show hammer reversal-type patterns within falling wedges that are quite similar to many previous iterations that resolved bullishly.
Until further notice, TSLA, LTHM, and another US-based lithium producer (LAC) appear to be ending yet another falling wedge pattern to reverse to bullish upside. And, thus, I am cautiously bullish on all 3. However, for me, LTHM's breakout appears slightly stronger than that of the other two, so I consider it the preferred trade. LAC could be the highest upside trade of the 3 given its outperformance of the other two since the March lows.
הערה
Of course, we've fallen off in all these assets with this mini taper tantrum, but nearly all commodities got hammered the past two days, and these 3 have held above Tuesday's lows. I don't necessarily see evidence of a long term trend change in these or in other commodities.הפקודה בוטלה
The descending breakout has apparently failed. I'm not going long in any of these
כתב ויתור
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