Correlation Between Nike and TFI International
Can any of the company-specific risk be diversified away by investing in both Nike 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 Nike and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and TFI International, you can compare the effects of market volatilities on Nike 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 Nike with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and TFI International.
Diversification Opportunities for Nike and TFI International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nike and TFI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Nike 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 Nike 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 Nike i.e., Nike and TFI International go up and down completely randomly.
Pair Corralation between Nike and TFI International
Considering the 90-day investment horizon Nike Inc is expected to generate 0.55 times more return on investment than TFI International. However, Nike Inc is 1.83 times less risky than TFI International. It trades about 0.17 of its potential returns per unit of risk. TFI International is currently generating about -0.38 per unit of risk. If you would invest 7,439 in Nike Inc on November 29, 2024 and sell it today you would earn a total of 678.00 from holding Nike Inc or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. TFI International
Performance |
| Timeline |
| Nike Inc |
| TFI International |
Nike and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and TFI International
The main advantage of trading using opposite Nike and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike 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 Nike 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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