Correlation Between TFS FINANCIAL and Sixt SE

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

By analyzing existing cross correlation between TFS FINANCIAL and Sixt SE, you can compare the effects of market volatilities on TFS FINANCIAL and Sixt SE 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 Sixt SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and Sixt SE.

Diversification Opportunities for TFS FINANCIAL and Sixt SE

0.11

Correlation Coefficient

TFS FINANCIAL  Sixt SE

Average diversification

The 3 months correlation between TFS and Sixt is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE 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 Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and Sixt SE go up and down completely randomly.

Pair Corralation between TFS FINANCIAL and Sixt SE

Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.02 times more return on investment than Sixt SE. However, TFS FINANCIAL is 1.02 times more volatile than Sixt SE. It trades about 0.11 of its potential returns per unit of risk. Sixt SE is currently generating about 0.07 per unit of risk. If you would invest  1,136  in TFS FINANCIAL on September 12, 2024 and sell it today you would earn a total of  144.00  from holding TFS FINANCIAL or generate 12.68% return on investment over 90 days.

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

TFS FINANCIAL  vs.  Sixt SE

TFS FINANCIAL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TFS FINANCIAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sixt SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Sixt SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TFS FINANCIAL and Sixt SE

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

The idea behind TFS FINANCIAL and Sixt SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.