Correlation Between Employers Holdings and TFI International

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

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

Diversification Opportunities for Employers Holdings and TFI International

0.73

Correlation Coefficient

Employers Holdings  TFI International

Poor diversification

The 3 months correlation between Employers and TFI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and TFI International go up and down completely randomly.

Pair Corralation between Employers Holdings and TFI International

Considering the 90-day investment horizon Employers Holdings is expected to under-perform the TFI International. But the stock apears to be less risky and, when comparing its historical volatility, Employers Holdings is 1.45 times less risky than TFI International. The stock trades about -0.02 of its potential returns per unit of risk. The TFI International is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  14,366  in TFI International on September 16, 2024 and sell it today you would earn a total of  919.00  from holding TFI International or generate 6.4% return on investment over 90 days.

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

Employers Holdings  vs.  TFI International

Employers Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TFI International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Employers Holdings and TFI International

The main advantage of trading using opposite Employers Holdings and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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 Employers Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.