Comparative financial market volatility Analysis of S&P 500, Dow Jones, and Tesla (16 Aug 2021 - 8 Sept 2023)
Question
Task: Which assets showed higher financial market volatility during the period between 16 Aug 2021 and 8 Sept 2023?
Answer
Introduction:
Volatility, a key indicator in the world of financial market volatility markets, is crucial for assessing the risk of investments and estimating prospective rewards (Liu, Kiskin, & Roberts, 2020). In this thorough research, we examine the complex dynamics of the S&P 500, Dow Jones, and Tesla, breaking down their price movements throughout the specified time frame. Our main goal is to identify which of these assets has displayed the most notable and pronounced price fluctuations in order to shed light on their risk profiles and investment possibilities throughout the course of the research period.
Analysis:
S&P 500:
A popular financial market volatility market volatility index called the S&P 500 has displayed modest volatility during the study period. The following are the main findings:
Current S&P 500 Price: 4451.14
Exponential Moving Average: 4050
Price-Moving Average Difference: 400 points
Historical data indicates oscillation around the moving average.
Estimated potential retracement below the moving average: 400 points
Percentage range of movement relative to the current price: Approximately 20%
Dow Jones:
In comparison to the S&P 500, the Dow Jones Industrial Average, another well-known financial market volatility market volatility indicator, has shown less volatility. The following are the main findings:
Current Dow Jones Price: 34,500
Exponential Moving Average: 32,900
Price-Moving Average Difference: 1,600 points
Historical data indicates oscillation around the moving average.
Estimated potential retracement below the moving average: 1,600 points
Percentage range of movement relative to the current price: Approximately 10%
Tesla:
Among the three assets, Tesla, a well-known individual stock, has shown the most volatility. The following are the main findings:
Current Tesla Price: 251.49
Exponential Moving Average: 180
Price-Moving Average Difference: 70 points
Historical data indicates oscillation around the moving average.
Estimated potential retracement below the moving average: 70 points
Percentage range of movement relative to the current price: Approximately 60%
Results
We may get useful insights about the volatility profiles of the three investigated assets after carefully examining historical data and price trends:
Tesla: Tesla has carved out a spectacular path in the midst of volatility, with an astounding percentage range of about 60% in relation to its current spot price. Individual equities generally exhibit this increased volatility, especially well-known stocks like Tesla. Tesla investors are well aware of the company's penchant for large price swings, which are frequently sparked by causes ranging from business advancements to market sentiment. The noticeable volatility emphasises the value of a thorough risk analysis for individuals contemplating include Tesla in their portfolio.
S&P 500: The S&P 500 is a representative index of US equities that falls in the centre of the volatility spectrum. It had modest price fluctuations over the time under study, with a percentage range of roughly 20% in relation to its current spot price. Large-cap companies are included in a diversified portfolio that exhibits this level of volatility (Fassas & Siriopoulos, 2021). When making investing decisions related to the S&P 500, savvy investors should take into account the underlying market volatility even though it may not reflect the extremes of individual equities like Tesla.
Dow Jones: The Dow Jones Industrial Average emerges as the sign of stability, in contrast to both Tesla and the S&P 500. It displayed the least volatility among the three, with a percentage range of about 10% in relation to its current spot price. It consists of reputable blue-chip firms. The Dow is known for being consistent and resilient in the face of market swings, which is highlighted by its comparatively lower degree of volatility. For investors searching for a less volatile investing path, it provides as a dependable benchmark.
Overall, the financial market volatility research reveals Tesla to be the most erratic of the three assets, which is consistent with its status as an individual stock subject to significant price fluctuations. The S&P 500 has moderate volatility and represents a variety of large-cap stocks. The least volatile of the three is the Dow Jones Industrial Average, which is based on blue-chip staples. These results are crucial for investors because they shed light on the distinctive risk and return profiles linked to each asset, allowing for better educated investing choices that are in line with personal risk tolerance and goals (Abolghasemi, Beh, Tarr, & Gerlach, 2020).
Conclusion
In conclusion, due mostly to its status as an individual stock, Tesla stands out as the asset with the highest level of volatility. The volatility of the S&P 500 and Dow Jones, which reflect broad market indexes, is significantly lower, with the Dow Jones being the least volatile asset out of the three. These degrees of volatility should be taken into account by investors when making investing decisions since they have a big impact on risk and possible rewards.
Bibliography
Abolghasemi, M., Beh, E., Tarr, G., & Gerlach, R. (2020). Demand forecasting in supply chain: The impact of demand volatility in the presence of promotion. Computers & Industrial Engineering, 142, retrieved from https://pdf.sciencedirectassets.com/271420/1-s2.0-S0360835220X00039/1-s2.0-S0360835220301145/main.pdf?X-Amz-Security-Token=IQoJb3JpZ2luX2VjENz%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJHMEUCIQDqEQ3v3Hm%2BN1JzBbN%2BA9fhjdf%2BDk4wL1H5HG.
Fassas, A., & Siriopoulos, C. (2021). Implied volatility indices–A review. The Quarterly Review of Economics and Finance, 79, 303-329 retrieved from https://www.sciencedirect.com/science/article/abs/pii/S1062976920300855.
Liu, B., Kiskin, I., & Roberts, S. (2020). An overview of Gaussian process regression for volatility forecasting. 2020 International Conference on Artificial Intelligence in Information and Communication (ICAIIC). IEEE, 681-686 retrievd from https://ieeexplore.ieee.org/abstract/document/9065045. financial market volatility
