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Shares of electric car giant Tesla saw record trades in Friday’s session, with trading volumes exceeding the last 30-day average trade due to unprecedented inflows of passive funds before trading began on the S & P500 index stocks starting next Monday’s session.
The stock rose 5.9% in the last session of the week, to close at a new high around new all-time highs at $ 695 per share, with some fluctuations in the stock limiting its gains, according to what has been reported by the American CNBC.
FactSet data indicates that the stock’s trading volumes reached around 200 million shares, making it one of the most-traded stocks on the market in the last few sessions of the week, and this volume equates to roughly 4 times the average daily trading volumes in the past month due to passive fund purchases.
Dormant funds are a category of investment funds that allocate their investments in shares according to the weight of each share within the index and without the slightest interference from the fund in the choice. The higher the relative weight of the stock in the index, the more the value of the cash is channeled there, and vice versa.
Ahead of Friday’s session, S&P Dow Jones Indices estimated the volume of passive funds traded in Tesla’s stock with purchases estimated at $ 85 billion, while the total value of trades in the stock after the end of the session was $ 131 billion. Informal stock buying activities will pay between 50 and 100%.
A steady increase in the company’s shares would make it the fifth or sixth largest company in the index in terms of relative weight, as the S & P500 index follows a market-weighted methodology whereby the value of market is determined by the number of shares available for trading.
When the company was announced to join the index, Tesla’s relative weight in the index was around 1%, but recent gains have pushed the company to weigh on the index, which means that funds that track the index will have to buy more shares of the company.
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