Correlation Between TFI International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both TFI International and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Dow Jones Industrial, you can compare the effects of market volatilities on TFI International and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Dow Jones.
Diversification Opportunities for TFI International and Dow Jones
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between TFI and Dow is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of TFI International i.e., TFI International and Dow Jones go up and down completely randomly.
Pair Corralation between TFI International and Dow Jones
Given the investment horizon of 90 days TFI International is expected to generate 2.62 times more return on investment than Dow Jones. However, TFI International is 2.62 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 13,168 in TFI International on August 24, 2024 and sell it today you would earn a total of 1,636 from holding TFI International or generate 12.42% 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. Dow Jones Industrial
Performance |
| Timeline |
TFI International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
TFI International
Pair trading matchups for TFI International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with TFI International and Dow Jones
The main advantage of trading using opposite TFI International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| TFI International vs. Small Cap Core | TFI International vs. Morningstar Unconstrained Allocation | TFI International vs. Mutual Of America | TFI International vs. Ep Emerging Markets |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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