Correlation Between TFI International and Australian Oilseeds
Can any of the company-specific risk be diversified away by investing in both TFI International and Australian Oilseeds 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 Australian Oilseeds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Australian Oilseeds Holdings, you can compare the effects of market volatilities on TFI International and Australian Oilseeds 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 Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Australian Oilseeds.
Diversification Opportunities for TFI International and Australian Oilseeds
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TFI and Australian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds 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 Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of TFI International i.e., TFI International and Australian Oilseeds go up and down completely randomly.
Pair Corralation between TFI International and Australian Oilseeds
Given the investment horizon of 90 days TFI International is expected to generate 37.82 times less return on investment than Australian Oilseeds. But when comparing it to its historical volatility, TFI International is 20.56 times less risky than Australian Oilseeds. It trades about 0.06 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5.38 in Australian Oilseeds Holdings on September 3, 2024 and sell it today you would lose (3.88) from holding Australian Oilseeds Holdings or give up 72.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.92% |
| Values | Daily Returns |
TFI International vs. Australian Oilseeds Holdings
Performance |
| Timeline |
| TFI International |
| Australian Oilseeds |
TFI International and Australian Oilseeds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Australian Oilseeds
The main advantage of trading using opposite TFI International and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Australian Oilseeds 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 Australian Oilseeds will offset losses from the drop in Australian Oilseeds' long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| Australian Oilseeds vs. CHS Inc CL | Australian Oilseeds vs. CHS Inc Pref | Australian Oilseeds vs. CHS Inc Pref | Australian Oilseeds vs. CHS Inc CM |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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