Correlation Between TFS Financial and Wynn Resorts

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

By analyzing existing cross correlation between TFS Financial and Wynn Resorts Limited, you can compare the effects of market volatilities on TFS Financial and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS Financial and Wynn Resorts.

Diversification Opportunities for TFS Financial and Wynn Resorts

-0.69

Correlation Coefficient

TFS Financial  Wynn Resorts

Excellent diversification

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

Pair Corralation between TFS Financial and Wynn Resorts

Given the investment horizon of 90 days TFS Financial is expected to under-perform the Wynn Resorts. In addition to that, TFS Financial is 1.1 times more volatile than Wynn Resorts Limited. It trades about -0.07 of its total potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.03 per unit of volatility. If you would invest  9,884  in Wynn Resorts Limited on January 17, 2024 and sell it today you would earn a total of  60.00  from holding Wynn Resorts Limited or generate 0.61% 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.  Wynn Resorts Limited

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 latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Wynn Resorts Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wynn Resorts may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with TFS Financial and Wynn Resorts

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

The idea behind TFS Financial and Wynn Resorts Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.