Correlation Between Media and TFS FINANCIAL

Can any of the company-specific risk be diversified away by investing in both Media and TFS FINANCIAL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Media and TFS FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Media and Games and TFS FINANCIAL, you can compare the effects of market volatilities on Media and TFS FINANCIAL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Media with a short position of TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and TFS FINANCIAL.

Diversification Opportunities for Media and TFS FINANCIAL

0.52

Correlation Coefficient

Media  TFS FINANCIAL

Very weak diversification

The 3 months correlation between Media and TFS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL and Media is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Media and Games are associated (or correlated) with TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of Media i.e., Media and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between Media and TFS FINANCIAL

Assuming the 90 days trading horizon Media and Games is expected to generate 4.8 times more return on investment than TFS FINANCIAL. However, Media is 4.8 times more volatile than TFS FINANCIAL. It trades about -0.02 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about -0.15 per unit of risk. If you would invest  318.00  in Media and Games on October 26, 2024 and sell it today you would lose (9.00) from holding Media and Games or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Media and Games  vs.  TFS FINANCIAL

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TFS FINANCIAL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TFS FINANCIAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Media and TFS FINANCIAL

The main advantage of trading using opposite Media and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media position performs unexpectedly, TFS FINANCIAL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL's long position.

The idea behind Media and Games and TFS FINANCIAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.