Correlation Between BANKINTER ADR and TFS FINANCIAL

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

By analyzing existing cross correlation between BANKINTER ADR 2007 and TFS FINANCIAL, you can compare the effects of market volatilities on BANKINTER ADR 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 BANKINTER ADR with a short position of TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and TFS FINANCIAL.

Diversification Opportunities for BANKINTER ADR and TFS FINANCIAL

0.24

Correlation Coefficient

BANKINTER ADR  TFS FINANCIAL

Modest diversification

The 3 months correlation between BANKINTER and TFS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL and BANKINTER ADR 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 BANKINTER ADR 2007 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 BANKINTER ADR i.e., BANKINTER ADR and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between BANKINTER ADR and TFS FINANCIAL

Assuming the 90 days horizon BANKINTER ADR is expected to generate 3.12 times less return on investment than TFS FINANCIAL. But when comparing it to its historical volatility, BANKINTER ADR 2007 is 1.06 times less risky than TFS FINANCIAL. It trades about 0.04 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

BANKINTER ADR 2007  vs.  TFS FINANCIAL

BANKINTER ADR 2007

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BANKINTER ADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with BANKINTER ADR and TFS FINANCIAL

The main advantage of trading using opposite BANKINTER ADR and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANKINTER ADR 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 BANKINTER ADR 2007 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.