Correlation Between TFI International and AMERICAN

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

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

Diversification Opportunities for TFI International and AMERICAN

0.21

Correlation Coefficient

TFI International  AMERICAN

Modest diversification

The 3 months correlation between TFI and AMERICAN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and AMERICAN TOWER PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN TOWER PORATION 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN TOWER PORATION has no effect on the direction of TFI International i.e., TFI International and AMERICAN go up and down completely randomly.

Pair Corralation between TFI International and AMERICAN

Given the investment horizon of 90 days TFI International is expected to under-perform the AMERICAN. In addition to that, TFI International is 1.92 times more volatile than AMERICAN TOWER PORATION. It trades about -0.37 of its total potential returns per unit of risk. AMERICAN TOWER PORATION is currently generating about -0.36 per unit of volatility. If you would invest  8,712  in AMERICAN TOWER PORATION on October 10, 2024 and sell it today you would lose (485.00) from holding AMERICAN TOWER PORATION or give up 5.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

TFI International  vs.  AMERICAN TOWER PORATION

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.

AMERICAN TOWER PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMERICAN TOWER PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMERICAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TFI International and AMERICAN

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

The idea behind TFI International and AMERICAN TOWER PORATION 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.