Correlation Between TFI International and JBTMarel Corp

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

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

Diversification Opportunities for TFI International and JBTMarel Corp

0.42

Correlation Coefficient

TFI International  JBTMarel Corp

Very weak diversification

The 3 months correlation between TFI and JBTMarel is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and JBTMarel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBTMarel Corp 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 JBTMarel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBTMarel Corp has no effect on the direction of TFI International i.e., TFI International and JBTMarel Corp go up and down completely randomly.

Pair Corralation between TFI International and JBTMarel Corp

Given the investment horizon of 90 days TFI International is expected to under-perform the JBTMarel Corp. But the stock apears to be less risky and, when comparing its historical volatility, TFI International is 1.11 times less risky than JBTMarel Corp. The stock trades about -0.45 of its potential returns per unit of risk. The JBTMarel Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  12,577  in JBTMarel Corp on October 11, 2024 and sell it today you would lose (358.00) from holding JBTMarel Corp or give up 2.85% of portfolio value over 90 days.

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

TFI International  vs.  JBTMarel Corp

TFI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFI International has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

JBTMarel Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JBTMarel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, JBTMarel Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TFI International and JBTMarel Corp

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

The idea behind TFI International and JBTMarel Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.