Correlation Between TFI International and Griffon
Can any of the company-specific risk be diversified away by investing in both TFI International and Griffon 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 Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Griffon, you can compare the effects of market volatilities on TFI International and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Griffon.
Diversification Opportunities for TFI International and Griffon
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TFI and Griffon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of TFI International i.e., TFI International and Griffon go up and down completely randomly.
Pair Corralation between TFI International and Griffon
Given the investment horizon of 90 days TFI International is expected to generate 2.13 times less return on investment than Griffon. But when comparing it to its historical volatility, TFI International is 1.76 times less risky than Griffon. It trades about 0.27 of its potential returns per unit of risk. Griffon is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 6,318 in Griffon on September 2, 2024 and sell it today you would earn a total of 2,112 from holding Griffon or generate 33.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. Griffon
Performance |
| Timeline |
| TFI International |
| Griffon |
TFI International and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Griffon
The main advantage of trading using opposite TFI International and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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