Correlation Between Capital Power and TFI International
Can any of the company-specific risk be diversified away by investing in both Capital Power 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 Capital Power and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Power and TFI International, you can compare the effects of market volatilities on Capital Power 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 Capital Power with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Power and TFI International.
Diversification Opportunities for Capital Power and TFI International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Capital and TFI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Capital Power 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 Capital Power 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 Capital Power i.e., Capital Power and TFI International go up and down completely randomly.
Pair Corralation between Capital Power and TFI International
Assuming the 90 days trading horizon Capital Power is expected to generate 0.93 times more return on investment than TFI International. However, Capital Power is 1.08 times less risky than TFI International. It trades about 0.05 of its potential returns per unit of risk. TFI International is currently generating about 0.03 per unit of risk. If you would invest 3,855 in Capital Power on November 1, 2024 and sell it today you would earn a total of 1,400 from holding Capital Power or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Power vs. TFI International
Performance |
| Timeline |
| Capital Power |
| TFI International |
Capital Power and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Power and TFI International
The main advantage of trading using opposite Capital Power and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Power 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.| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
| TFI International vs. WSP Global | TFI International vs. Waste Connections | TFI International vs. Open Text Corp | TFI International vs. Cargojet |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |