Correlation Between Juniper Networks and TFS Financial

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

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

Diversification Opportunities for Juniper Networks and TFS Financial

0.29

Correlation Coefficient

Juniper Networks  TFS Financial

Modest diversification

The 3 months correlation between Juniper and TFS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and TFS Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS Financial and Juniper Networks 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 Juniper Networks 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 Juniper Networks i.e., Juniper Networks and TFS Financial go up and down completely randomly.

Pair Corralation between Juniper Networks and TFS Financial

Given the investment horizon of 90 days Juniper Networks is expected to generate 1.15 times more return on investment than TFS Financial. However, Juniper Networks is 1.15 times more volatile than TFS Financial. It trades about 0.03 of its potential returns per unit of risk. TFS Financial is currently generating about 0.0 per unit of risk. If you would invest  2,919  in Juniper Networks on January 20, 2024 and sell it today you would earn a total of  697.00  from holding Juniper Networks or generate 23.88% return on investment over 90 days.

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

Juniper Networks  vs.  TFS Financial

Juniper Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

TFS Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFS Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Juniper Networks and TFS Financial

The main advantage of trading using opposite Juniper Networks and TFS Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniper Networks 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 Juniper Networks 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.