Correlation Between Pekin Life and TFI International

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

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

Diversification Opportunities for Pekin Life and TFI International

0.73

Correlation Coefficient

Pekin Life  TFI International

Poor diversification

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

Pair Corralation between Pekin Life and TFI International

Given the investment horizon of 90 days Pekin Life is expected to generate 3.32 times less return on investment than TFI International. But when comparing it to its historical volatility, Pekin Life Insurance is 7.69 times less risky than TFI International. It trades about 0.13 of its potential returns per unit of risk. TFI International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14,432  in TFI International on September 16, 2024 and sell it today you would earn a total of  853.00  from holding TFI International or generate 5.91% return on investment over 90 days.

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

Pekin Life Insurance  vs.  TFI International

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Pekin Life and TFI International

The main advantage of trading using opposite Pekin Life and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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 Pekin Life Insurance 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.