Correlation Between TFI International and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both TFI International and Highway Holdings 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 Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Highway Holdings Limited, you can compare the effects of market volatilities on TFI International and Highway Holdings 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 Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Highway Holdings.
Diversification Opportunities for TFI International and Highway Holdings
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between TFI and Highway is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings 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 Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of TFI International i.e., TFI International and Highway Holdings go up and down completely randomly.
Pair Corralation between TFI International and Highway Holdings
Given the investment horizon of 90 days TFI International is expected to generate 2.21 times more return on investment than Highway Holdings. However, TFI International is 2.21 times more volatile than Highway Holdings Limited. It trades about 0.24 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.15 per unit of risk. If you would invest 13,382 in TFI International on September 1, 2024 and sell it today you would earn a total of 1,786 from holding TFI International or generate 13.35% 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. Highway Holdings Limited
Performance |
| Timeline |
| TFI International |
| Highway Holdings |
TFI International and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Highway Holdings
The main advantage of trading using opposite TFI International and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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