Correlation Between Black Hills and TFI International

Can any of the company-specific risk be diversified away by investing in both Black Hills and TFI International 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 Black Hills and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Black Hills and TFI International

-0.71

Correlation Coefficient

Black Hills  TFI International

Pay attention - limited upside

The 3 months correlation between Black and TFI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Black Hills 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 Black Hills are associated (or correlated) with TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Black Hills i.e., Black Hills and TFI International go up and down completely randomly.

Pair Corralation between Black Hills and TFI International

Considering the 90-day investment horizon Black Hills is expected to generate 0.41 times more return on investment than TFI International. However, Black Hills is 2.47 times less risky than TFI International. It trades about 0.02 of its potential returns per unit of risk. TFI International is currently generating about -0.25 per unit of risk. If you would invest  5,831  in Black Hills on December 26, 2024 and sell it today you would earn a total of  51.00  from holding Black Hills or generate 0.87% return on investment over 90 days.

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

Black Hills  vs.  TFI International

Black Hills

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

TFI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days TFI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Black Hills and TFI International

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

The idea behind Black Hills and TFI International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.