Correlation Between MYT Netherlands and TFI International

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

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

Diversification Opportunities for MYT Netherlands and TFI International

-0.06

Correlation Coefficient

MYT Netherlands  TFI International

Good diversification

The 3 months correlation between MYT and TFI is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and MYT Netherlands 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 MYT Netherlands Parent 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 MYT Netherlands i.e., MYT Netherlands and TFI International go up and down completely randomly.

Pair Corralation between MYT Netherlands and TFI International

Given the investment horizon of 90 days MYT Netherlands is expected to generate 1.42 times less return on investment than TFI International. In addition to that, MYT Netherlands is 2.8 times more volatile than TFI International. It trades about 0.01 of its total potential returns per unit of risk. TFI International is currently generating about 0.03 per unit of volatility. If you would invest  10,541  in TFI International on October 11, 2024 and sell it today you would earn a total of  2,778  from holding TFI International or generate 26.35% return on investment over 90 days.

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

MYT Netherlands Parent  vs.  TFI International

MYT Netherlands Parent

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MYT Netherlands Parent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MYT Netherlands is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 MYT Netherlands and TFI International

The main advantage of trading using opposite MYT Netherlands and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYT Netherlands 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 MYT Netherlands Parent 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.