Correlation Between TRON and FIRSTCASH

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

By analyzing existing cross correlation between TRON and FIRSTCASH INC 4625, you can compare the effects of market volatilities on TRON and FIRSTCASH 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 TRON with a short position of FIRSTCASH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and FIRSTCASH.

Diversification Opportunities for TRON and FIRSTCASH

0.69

Correlation Coefficient

TRON  FIRSTCASH

Poor diversification

The 3 months correlation between TRON and FIRSTCASH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TRON and FIRSTCASH INC 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRSTCASH INC 4625 and TRON 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 TRON are associated (or correlated) with FIRSTCASH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRSTCASH INC 4625 has no effect on the direction of TRON i.e., TRON and FIRSTCASH go up and down completely randomly.

Pair Corralation between TRON and FIRSTCASH

Assuming the 90 days trading horizon TRON is expected to generate 16.04 times more return on investment than FIRSTCASH. However, TRON is 16.04 times more volatile than FIRSTCASH INC 4625. It trades about 0.09 of its potential returns per unit of risk. FIRSTCASH INC 4625 is currently generating about -0.13 per unit of risk. If you would invest  17.00  in TRON on October 25, 2024 and sell it today you would earn a total of  8.00  from holding TRON or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.19%
Values	Daily Returns

TRON  vs.  FIRSTCASH INC 4625

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

FIRSTCASH INC 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIRSTCASH INC 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FIRSTCASH INC 4625 investors.

Pair Trading with TRON and FIRSTCASH

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

The idea behind TRON and FIRSTCASH INC 4625 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.