Correlation Between Canadian Western and TFI International
Can any of the company-specific risk be diversified away by investing in both Canadian Western 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 Canadian Western and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Western Bank and TFI International, you can compare the effects of market volatilities on Canadian Western 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 Canadian Western with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Western and TFI International.
Diversification Opportunities for Canadian Western and TFI International
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and TFI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Western Bank and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Canadian Western 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 Canadian Western Bank 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 Canadian Western i.e., Canadian Western and TFI International go up and down completely randomly.
Pair Corralation between Canadian Western and TFI International
Assuming the 90 days trading horizon Canadian Western Bank is expected to generate 1.84 times more return on investment than TFI International. However, Canadian Western is 1.84 times more volatile than TFI International. It trades about 0.07 of its potential returns per unit of risk. TFI International is currently generating about 0.06 per unit of risk. If you would invest 2,209 in Canadian Western Bank on August 29, 2024 and sell it today you would earn a total of 3,765 from holding Canadian Western Bank or generate 170.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Western Bank vs. TFI International
Performance |
| Timeline |
| Canadian Western Bank |
| TFI International |
Canadian Western and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Western and TFI International
The main advantage of trading using opposite Canadian Western and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Western 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.| Canadian Western vs. Laurentian Bank | Canadian Western vs. National Bank of | Canadian Western vs. Great West Lifeco | Canadian Western vs. CI Financial Corp |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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