Correlation Between Coty and TFI International
Can any of the company-specific risk be diversified away by investing in both Coty and TFI International 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 Coty and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and TFI International, you can compare the effects of market volatilities on Coty and TFI International 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 Coty with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and TFI International.
Diversification Opportunities for Coty and TFI International
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Coty and TFI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Coty 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 Coty Inc are associated (or correlated) with TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Coty i.e., Coty and TFI International go up and down completely randomly.
Pair Corralation between Coty and TFI International
Given the investment horizon of 90 days Coty Inc is expected to under-perform the TFI International. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 1.23 times less risky than TFI International. The stock trades about -0.07 of its potential returns per unit of risk. The TFI International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,615 in TFI International on August 29, 2024 and sell it today you would earn a total of 1,308 from holding TFI International or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. TFI International
Performance |
| Timeline |
| Coty Inc |
| TFI International |
Coty and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and TFI International
The main advantage of trading using opposite Coty and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.The idea behind Coty Inc and TFI International 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.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |