Correlation Between Topbuild Corp and TFI International

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

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

Diversification Opportunities for Topbuild Corp and TFI International

0.68

Correlation Coefficient

Topbuild Corp  TFI International

Poor diversification

The 3 months correlation between Topbuild and TFI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Topbuild Corp 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 Topbuild Corp 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 Topbuild Corp i.e., Topbuild Corp and TFI International go up and down completely randomly.

Pair Corralation between Topbuild Corp and TFI International

Considering the 90-day investment horizon Topbuild Corp is expected to generate 0.66 times more return on investment than TFI International. However, Topbuild Corp is 1.52 times less risky than TFI International. It trades about 0.01 of its potential returns per unit of risk. TFI International is currently generating about -0.24 per unit of risk. If you would invest  31,067  in Topbuild Corp on December 27, 2024 and sell it today you would earn a total of  115.00  from holding Topbuild Corp or generate 0.37% return on investment over 90 days.

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

Topbuild Corp  vs.  TFI International

Topbuild Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Topbuild Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Topbuild Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Topbuild Corp and TFI International

The main advantage of trading using opposite Topbuild Corp and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp 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 Topbuild Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.