I am trying to recreate the following image: 
Unfortunately, this has been drawn in Python, so I can't really use it. So I thought I should recreate it with Tikz.
My attempt at creating the left image:
\usetikzlibrary{arrows}
\usetikzlibrary{decorations.markings}
\begin{tikzpicture}
\coordinate (Origin) at (0,0);
\coordinate (OLSEstimates) at (2,8);
\coordinate (Intersect) at (2.55,4.3);
%0.5 scaled
\draw[rotate=45] (OLSEstimates) ellipse (1.275 and 3);
%0.75 scaled
\draw[rotate=45] (OLSEstimates) ellipse (1.9125 and 4.5);
%original boundary
\draw[rotate=45] (OLSEstimates) ellipse (2.56 and 6);
\draw [<->,thick] (0,10) node (yaxis) [above] {$y$}
|- (10,0) node (xaxis) [right] {$x$};
\draw (0,0) circle (5);
%draw line to intersection
\draw[draw=black,-triangle 90] (Origin) -- (Intersect);
\end{tikzpicture}
The problem now is, even though it looks like my circle is hitting the ellipse, it has been done painfully by manually adjusting the coordinates (so it's probably wrong). Second, the point intersection between the ellipse and the circle has also been done with the same method, so it's probably off by a bit.
Now I saw something crazy, that Tikz could calculate the coordinate of the intersections of two lines, so I was wondering, whether some kind of technique could be applied here.
A small sidenote: it would be perfect if it could even automatically scale the ellipse to the correct "size" as to intersect it at exactly one point, but I guess this is impossible (I've never seen someone do that).
Thanks!
