Correlation Between Carbon Revolution and TFI International

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

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

Diversification Opportunities for Carbon Revolution and TFI International

-0.54

Correlation Coefficient

Carbon Revolution  TFI International

Excellent diversification

The 3 months correlation between Carbon and TFI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Revolution Public and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Carbon Revolution 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 Carbon Revolution Public 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 Carbon Revolution i.e., Carbon Revolution and TFI International go up and down completely randomly.

Pair Corralation between Carbon Revolution and TFI International

Assuming the 90 days horizon Carbon Revolution Public is expected to generate 27.55 times more return on investment than TFI International. However, Carbon Revolution is 27.55 times more volatile than TFI International. It trades about 0.22 of its potential returns per unit of risk. TFI International is currently generating about -0.12 per unit of risk. If you would invest  2.92  in Carbon Revolution Public on October 22, 2024 and sell it today you would earn a total of  3.13  from holding Carbon Revolution Public or generate 107.19% return on investment over 90 days.

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

Carbon Revolution Public  vs.  TFI International

Carbon Revolution Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

TFI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, TFI International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Carbon Revolution and TFI International

The main advantage of trading using opposite Carbon Revolution and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carbon Revolution 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 Carbon Revolution Public 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 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.