Correlation Between TFI International and CONSOLIDATED

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

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

Diversification Opportunities for TFI International and CONSOLIDATED

-0.48

Correlation Coefficient

TFI International  CONSOLIDATED

Very good diversification

The 3 months correlation between TFI and CONSOLIDATED is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of TFI International i.e., TFI International and CONSOLIDATED go up and down completely randomly.

Pair Corralation between TFI International and CONSOLIDATED

Given the investment horizon of 90 days TFI International is expected to generate 85.96 times less return on investment than CONSOLIDATED. But when comparing it to its historical volatility, TFI International is 53.08 times less risky than CONSOLIDATED. It trades about 0.06 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,790  in CONSOLIDATED EDISON N on September 16, 2024 and sell it today you would lose (40.00) from holding CONSOLIDATED EDISON N or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.12%
Values	Daily Returns

TFI International  vs.  CONSOLIDATED EDISON N

TFI International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSOLIDATED EDISON N investors.

Pair Trading with TFI International and CONSOLIDATED

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

The idea behind TFI International and CONSOLIDATED EDISON N 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.