Correlation Between TFI International and Information Services

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

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

Diversification Opportunities for TFI International and Information Services

-0.45

Correlation Coefficient

TFI International  Information Services

Very good diversification

The 3 months correlation between TFI and Information is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of TFI International i.e., TFI International and Information Services go up and down completely randomly.

Pair Corralation between TFI International and Information Services

Assuming the 90 days trading horizon TFI International is expected to generate 2.73 times more return on investment than Information Services. However, TFI International is 2.73 times more volatile than Information Services. It trades about 0.24 of its potential returns per unit of risk. Information Services is currently generating about -0.32 per unit of risk. If you would invest  18,633  in TFI International on September 1, 2024 and sell it today you would earn a total of  2,684  from holding TFI International or generate 14.4% return on investment over 90 days.

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

TFI International  vs.  Information Services

TFI International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Information Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Information Services 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 Information Services

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

The idea behind TFI International and Information Services 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.