Correlation Between TFS FINANCIAL and Grupo Carso

Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL and Grupo Carso 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 TFS FINANCIAL and Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TFS FINANCIAL and Grupo Carso SAB, you can compare the effects of market volatilities on TFS FINANCIAL and Grupo Carso 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 TFS FINANCIAL with a short position of Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and Grupo Carso.

Diversification Opportunities for TFS FINANCIAL and Grupo Carso

0.67

Correlation Coefficient

TFS FINANCIAL  Grupo Carso

Poor diversification

The 3 months correlation between TFS and Grupo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and TFS FINANCIAL 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 TFS FINANCIAL are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and Grupo Carso go up and down completely randomly.

Pair Corralation between TFS FINANCIAL and Grupo Carso

Assuming the 90 days trading horizon TFS FINANCIAL is expected to under-perform the Grupo Carso. But the stock apears to be less risky and, when comparing its historical volatility, TFS FINANCIAL is 1.07 times less risky than Grupo Carso. The stock trades about -0.02 of its potential returns per unit of risk. The Grupo Carso SAB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Grupo Carso SAB on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Grupo Carso SAB or generate 1.92% return on investment over 90 days.

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

TFS FINANCIAL  vs.  Grupo Carso SAB

TFS FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TFS FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TFS FINANCIAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Carso SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TFS FINANCIAL and Grupo Carso

The main advantage of trading using opposite TFS FINANCIAL and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.

The idea behind TFS FINANCIAL and Grupo Carso SAB 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.