Correlation Between TFI International and Werner Enterprises

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

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

Diversification Opportunities for TFI International and Werner Enterprises

0.54

Correlation Coefficient

TFI International  Werner Enterprises

Very weak diversification

The 3 months correlation between TFI and Werner is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises 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 Werner Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprises has no effect on the direction of TFI International i.e., TFI International and Werner Enterprises go up and down completely randomly.

Pair Corralation between TFI International and Werner Enterprises

Given the investment horizon of 90 days TFI International is expected to generate 1.21 times more return on investment than Werner Enterprises. However, TFI International is 1.21 times more volatile than Werner Enterprises. It trades about 0.05 of its potential returns per unit of risk. Werner Enterprises is currently generating about 0.0 per unit of risk. If you would invest  10,719  in TFI International on September 3, 2024 and sell it today you would earn a total of  4,546  from holding TFI International or generate 42.41% return on investment over 90 days.

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

TFI International  vs.  Werner Enterprises

TFI International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Werner Enterprises

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Werner Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TFI International and Werner Enterprises

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

The idea behind TFI International and Werner Enterprises 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.