Correlation Between Scientific Games and TFS FINANCIAL

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

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

Diversification Opportunities for Scientific Games and TFS FINANCIAL

0.61

Correlation Coefficient

Scientific Games  TFS FINANCIAL

Poor diversification

The 3 months correlation between Scientific and TFS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL and Scientific Games 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 Scientific 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 Scientific Games i.e., Scientific Games and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between Scientific Games and TFS FINANCIAL

Assuming the 90 days horizon Scientific Games is expected to generate 1.14 times more return on investment than TFS FINANCIAL. However, Scientific Games is 1.14 times more volatile than TFS FINANCIAL. It trades about 0.38 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.0 per unit of risk. If you would invest  8,100  in Scientific Games on October 22, 2024 and sell it today you would earn a total of  550.00  from holding Scientific Games or generate 6.79% return on investment over 90 days.

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

Scientific Games  vs.  TFS FINANCIAL

Scientific Games

Risk-Adjusted Performance

2 of 100

Weak

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

TFS FINANCIAL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, TFS FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Scientific Games and TFS FINANCIAL

The main advantage of trading using opposite Scientific Games and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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 Scientific 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.