Correlation Between TFI International and BCE
Can any of the company-specific risk be diversified away by investing in both TFI International and BCE 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 BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and BCE Inc, you can compare the effects of market volatilities on TFI International and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and BCE.
Diversification Opportunities for TFI International and BCE
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TFI and BCE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of TFI International i.e., TFI International and BCE go up and down completely randomly.
Pair Corralation between TFI International and BCE
Given the investment horizon of 90 days TFI International is expected to generate 1.14 times more return on investment than BCE. However, TFI International is 1.14 times more volatile than BCE Inc. It trades about 0.27 of its potential returns per unit of risk. BCE Inc is currently generating about -0.35 per unit of risk. If you would invest 13,207 in TFI International on September 2, 2024 and sell it today you would earn a total of 1,961 from holding TFI International or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. BCE Inc
Performance |
| Timeline |
| TFI International |
| BCE Inc |
TFI International and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and BCE
The main advantage of trading using opposite TFI International and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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