Correlation Between TFI International and Eli Lilly

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

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

Diversification Opportunities for TFI International and Eli Lilly

-0.67

Correlation Coefficient

TFI International  Eli Lilly

Excellent diversification

The 3 months correlation between TFI and Eli is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly 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 Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of TFI International i.e., TFI International and Eli Lilly go up and down completely randomly.

Pair Corralation between TFI International and Eli Lilly

Assuming the 90 days trading horizon TFI International is expected to generate 1.0 times more return on investment than Eli Lilly. However, TFI International is 1.0 times less risky than Eli Lilly. It trades about 0.02 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.14 per unit of risk. If you would invest  19,708  in TFI International on September 24, 2024 and sell it today you would earn a total of  186.00  from holding TFI International or generate 0.94% return on investment over 90 days.

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

TFI International  vs.  Eli Lilly and

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. In spite of very healthy basic indicators, TFI International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Eli Lilly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eli Lilly and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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 TFI International and Eli Lilly

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

The idea behind TFI International and Eli Lilly and 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.