Correlation Between TFI International and Lucid

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

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

Diversification Opportunities for TFI International and Lucid

-0.37

Correlation Coefficient

TFI International  Lucid

Very good diversification

The 3 months correlation between TFI and Lucid is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of TFI International i.e., TFI International and Lucid go up and down completely randomly.

Pair Corralation between TFI International and Lucid

Given the investment horizon of 90 days TFI International is expected to generate 23.39 times less return on investment than Lucid. But when comparing it to its historical volatility, TFI International is 3.0 times less risky than Lucid. It trades about 0.01 of its potential returns per unit of risk. Lucid Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Lucid Group on September 23, 2024 and sell it today you would earn a total of  52.00  from holding Lucid Group or generate 20.8% return on investment over 90 days.

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

TFI International  vs.  Lucid Group

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.

Lucid Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TFI International and Lucid

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

The idea behind TFI International and Lucid Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.