Correlation Between Plum Acquisition and TFI International

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

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

Diversification Opportunities for Plum Acquisition and TFI International

-0.43

Correlation Coefficient

Plum Acquisition  TFI International

Very good diversification

The 3 months correlation between Plum and TFI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Plum Acquisition Corp and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Plum Acquisition 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 Plum Acquisition Corp 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 Plum Acquisition i.e., Plum Acquisition and TFI International go up and down completely randomly.

Pair Corralation between Plum Acquisition and TFI International

Assuming the 90 days horizon Plum Acquisition Corp is expected to generate 0.06 times more return on investment than TFI International. However, Plum Acquisition Corp is 17.17 times less risky than TFI International. It trades about 0.15 of its potential returns per unit of risk. TFI International is currently generating about 0.0 per unit of risk. If you would invest  1,100  in Plum Acquisition Corp on October 6, 2024 and sell it today you would earn a total of  9.00  from holding Plum Acquisition Corp or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Plum Acquisition Corp  vs.  TFI International

Plum Acquisition Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, Plum Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TFI International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Plum Acquisition and TFI International

The main advantage of trading using opposite Plum Acquisition and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plum Acquisition 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 Plum Acquisition Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.