Correlation Between TFI International and Enghouse Systems

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

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

Diversification Opportunities for TFI International and Enghouse Systems

0.76

Correlation Coefficient

TFI International  Enghouse Systems

Poor diversification

The 3 months correlation between TFI and Enghouse is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and TFI International 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 TFI International are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of TFI International i.e., TFI International and Enghouse Systems go up and down completely randomly.

Pair Corralation between TFI International and Enghouse Systems

Assuming the 90 days trading horizon TFI International is expected to under-perform the Enghouse Systems. In addition to that, TFI International is 2.25 times more volatile than Enghouse Systems. It trades about -0.26 of its total potential returns per unit of risk. Enghouse Systems is currently generating about -0.07 per unit of volatility. If you would invest  2,710  in Enghouse Systems on December 30, 2024 and sell it today you would lose (175.00) from holding Enghouse Systems or give up 6.46% of portfolio value over 90 days.

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

TFI International  vs.  Enghouse Systems

TFI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days TFI International 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Enghouse Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enghouse Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TFI International and Enghouse Systems

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

The idea behind TFI International and Enghouse Systems 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.