Correlation Between TFS FINANCIAL and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL and Meiko Electronics 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 Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS FINANCIAL and Meiko Electronics Co, you can compare the effects of market volatilities on TFS FINANCIAL and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and Meiko Electronics.
Diversification Opportunities for TFS FINANCIAL and Meiko Electronics
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TFS and Meiko is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and Meiko Electronics go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and Meiko Electronics
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 2.43 times less return on investment than Meiko Electronics. But when comparing it to its historical volatility, TFS FINANCIAL is 2.26 times less risky than Meiko Electronics. It trades about 0.08 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,060 in Meiko Electronics Co on September 2, 2024 and sell it today you would earn a total of 1,640 from holding Meiko Electronics Co or generate 40.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. Meiko Electronics Co
Performance |
| Timeline |
| TFS FINANCIAL |
| Meiko Electronics |
TFS FINANCIAL and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and Meiko Electronics
The main advantage of trading using opposite TFS FINANCIAL and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| TFS FINANCIAL vs. SIVERS SEMICONDUCTORS AB | TFS FINANCIAL vs. Darden Restaurants | TFS FINANCIAL vs. Reliance Steel Aluminum | TFS FINANCIAL vs. Q2M Managementberatung AG |
| Meiko Electronics vs. GRIFFIN MINING LTD | Meiko Electronics vs. Jacquet Metal Service | Meiko Electronics vs. Federal Agricultural Mortgage | Meiko Electronics vs. Harmony Gold Mining |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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