As Tesla’s shares have plunged by 40%, a curious trend has emerged in the market: six stocks within the S&P 500 have exhibited a remarkable inverse correlation to the electric vehicle giant. In other words, when Tesla’s stock value dips, these companies tend to rise.
Analyzing the Inverse Relationship
A recent analysis by LA News Center Pro scrutinized recent trading data to uncover these six inverse movers:
- Linde: A chemical manufacturing giant
- FMC: Another prominent chemical company
- eBay: A renowned online marketplace
- Church & Dwight: Producer of household products and consumables
- Walmart: The global retail behemoth
- Wells Fargo: A major lender
The negative correlation between these stocks and Tesla’s performance was particularly pronounced in March and April 2023. This correlation suggests that investors may be seeking sanctuary in more traditional companies when concerns about Tesla’s growth prospects or technical challenges surface.
Tesla’s Pivotal Shift and Market Concerns
According to Emmanuel Rosner, an analyst at Deutsche Bank, Tesla’s recent struggles stem from a potential shift away from developing an affordable electric vehicle to focusing on self-driving technology. This pivot has raised concerns among investors about the company’s long-term profitability.
Consequently, Rosner has downgraded his price target for Tesla from 9 to 3, implying a potential 15% decline in the stock’s value over the next 12 months. The analyst’s downgrade has further fueled the bearish sentiment surrounding Tesla.
Strongest Inverse Correlation with Tesla
Among the ten stocks that exhibited the strongest inverse correlation with Tesla’s performance last week, Church & Dwight stands out as the only company that maintained this inverse correlation in both March and April. This observation suggests that investors may view Church & Dwight as a stable haven during periods of turbulence in the automotive industry.
While inverse correlations do not necessarily imply causation or guarantee future returns, they do shed light on market dynamics and investor sentiment. The inverse relationship between Tesla and these six stocks highlights the contrasting fortunes of high-growth technology companies and more traditional businesses amid market uncertainty.
