Correlation Between TFI International and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both TFI International and Gildan Activewear 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 TFI International and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Gildan Activewear, you can compare the effects of market volatilities on TFI International and Gildan Activewear 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 TFI International with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Gildan Activewear.
Diversification Opportunities for TFI International and Gildan Activewear
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TFI and Gildan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and TFI International 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 TFI International are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of TFI International i.e., TFI International and Gildan Activewear go up and down completely randomly.
Pair Corralation between TFI International and Gildan Activewear
Assuming the 90 days trading horizon TFI International is expected to generate 2.99 times more return on investment than Gildan Activewear. However, TFI International is 2.99 times more volatile than Gildan Activewear. It trades about 0.2 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.24 per unit of risk. If you would invest 18,588 in TFI International on August 26, 2024 and sell it today you would earn a total of 2,174 from holding TFI International or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. Gildan Activewear
Performance |
| Timeline |
| TFI International |
| Gildan Activewear |
TFI International and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Gildan Activewear
The main advantage of trading using opposite TFI International and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.| TFI International vs. WSP Global | TFI International vs. Waste Connections | TFI International vs. Open Text Corp | TFI International vs. Cargojet |
| Gildan Activewear vs. Saputo Inc | Gildan Activewear vs. CCL Industries | Gildan Activewear vs. Thomson Reuters Corp | Gildan Activewear vs. George Weston Limited |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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