Correlation Between TFI International and BEST
Can any of the company-specific risk be diversified away by investing in both TFI International and BEST 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 BEST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and BEST Inc, you can compare the effects of market volatilities on TFI International and BEST 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 BEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and BEST.
Diversification Opportunities for TFI International and BEST
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between TFI and BEST is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and BEST Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEST 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 BEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEST Inc has no effect on the direction of TFI International i.e., TFI International and BEST go up and down completely randomly.
Pair Corralation between TFI International and BEST
Given the investment horizon of 90 days TFI International is expected to generate 0.57 times more return on investment than BEST. However, TFI International is 1.77 times less risky than BEST. It trades about 0.05 of its potential returns per unit of risk. BEST Inc is currently generating about 0.01 per unit of risk. If you would invest 10,247 in TFI International on September 2, 2024 and sell it today you would earn a total of 4,921 from holding TFI International or generate 48.02% 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. BEST Inc
Performance |
| Timeline |
| TFI International |
| BEST Inc |
TFI International and BEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and BEST
The main advantage of trading using opposite TFI International and BEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, BEST 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 BEST will offset losses from the drop in BEST's long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| BEST vs. Heartland Express | BEST vs. Universal Logistics Holdings | BEST vs. Marten Transport | BEST 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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