Correlation Between NFI and Cargojet

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

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

Diversification Opportunities for NFI and Cargojet

0.8

Correlation Coefficient

NFI  Cargojet

Very poor diversification

The 3 months correlation between NFI and Cargojet is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet and NFI 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 NFI Group are associated (or correlated) with Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of NFI i.e., NFI and Cargojet go up and down completely randomly.

Pair Corralation between NFI and Cargojet

If you would invest  963.00  in NFI Group on September 24, 2024 and sell it today you would earn a total of  439.00  from holding NFI Group or generate 45.59% return on investment over 90 days.

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

NFI Group  vs.  Cargojet

NFI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cargojet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargojet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NFI and Cargojet

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

The idea behind NFI Group and Cargojet 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.