Correlation Between TFI International and Coty
Can any of the company-specific risk be diversified away by investing in both TFI International and Coty 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 Coty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Coty Inc, you can compare the effects of market volatilities on TFI International and Coty 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 Coty. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Coty.
Diversification Opportunities for TFI International and Coty
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TFI and Coty is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty 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 Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of TFI International i.e., TFI International and Coty go up and down completely randomly.
Pair Corralation between TFI International and Coty
Given the investment horizon of 90 days TFI International is expected to generate 0.88 times more return on investment than Coty. However, TFI International is 1.14 times less risky than Coty. It trades about 0.0 of its potential returns per unit of risk. Coty Inc is currently generating about -0.18 per unit of risk. If you would invest 15,105 in TFI International on August 25, 2024 and sell it today you would lose (232.00) from holding TFI International or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. Coty Inc
Performance |
| Timeline |
| TFI International |
| Coty Inc |
TFI International and Coty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Coty
The main advantage of trading using opposite TFI International and Coty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Coty 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 Coty will offset losses from the drop in Coty's long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Werner Enterprises | TFI International vs. Knight Transportation |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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