Correlation Between Highway Holdings and TFI International
Can any of the company-specific risk be diversified away by investing in both Highway Holdings 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 Highway Holdings and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and TFI International, you can compare the effects of market volatilities on Highway Holdings 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 Highway Holdings with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and TFI International.
Diversification Opportunities for Highway Holdings and TFI International
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and TFI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Highway Holdings 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 Highway Holdings Limited 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 Highway Holdings i.e., Highway Holdings and TFI International go up and down completely randomly.
Pair Corralation between Highway Holdings and TFI International
Given the investment horizon of 90 days Highway Holdings is expected to generate 3.53 times less return on investment than TFI International. But when comparing it to its historical volatility, Highway Holdings Limited is 2.21 times less risky than TFI International. It trades about 0.15 of its potential returns per unit of risk. TFI International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 13,382 in TFI International on September 1, 2024 and sell it today you would earn a total of 1,786 from holding TFI International or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. TFI International
Performance |
| Timeline |
| Highway Holdings |
| TFI International |
Highway Holdings and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and TFI International
The main advantage of trading using opposite Highway Holdings and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings 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.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
| 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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