Correlation Between TFS FINANCIAL and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL and Scandinavian Tobacco 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 Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS FINANCIAL and Scandinavian Tobacco Group, you can compare the effects of market volatilities on TFS FINANCIAL and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and Scandinavian Tobacco.
Diversification Opportunities for TFS FINANCIAL and Scandinavian Tobacco
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TFS and Scandinavian is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and Scandinavian Tobacco
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.06 times more return on investment than Scandinavian Tobacco. However, TFS FINANCIAL is 1.06 times more volatile than Scandinavian Tobacco Group. It trades about 0.3 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.05 per unit of risk. If you would invest 1,170 in TFS FINANCIAL on August 29, 2024 and sell it today you would earn a total of 210.00 from holding TFS FINANCIAL or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| TFS FINANCIAL |
| Scandinavian Tobacco |
TFS FINANCIAL and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and Scandinavian Tobacco
The main advantage of trading using opposite TFS FINANCIAL and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Microsoft | TFS FINANCIAL vs. Microsoft |
| Scandinavian Tobacco vs. QBE Insurance Group | Scandinavian Tobacco vs. XLMedia PLC | Scandinavian Tobacco vs. MSAD INSURANCE | Scandinavian Tobacco vs. REVO INSURANCE SPA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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