Correlation Between TFI International and Merit Medical
Can any of the company-specific risk be diversified away by investing in both TFI International and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Merit Medical Systems, you can compare the effects of market volatilities on TFI International and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Merit Medical.
Diversification Opportunities for TFI International and Merit Medical
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TFI and Merit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of TFI International i.e., TFI International and Merit Medical go up and down completely randomly.
Pair Corralation between TFI International and Merit Medical
Given the investment horizon of 90 days TFI International is expected to generate 47.67 times less return on investment than Merit Medical. But when comparing it to its historical volatility, TFI International is 1.0 times less risky than Merit Medical. It trades about 0.01 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 9,607 in Merit Medical Systems on November 3, 2024 and sell it today you would earn a total of 1,281 from holding Merit Medical Systems or generate 13.33% 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. Merit Medical Systems
Performance |
| Timeline |
| TFI International |
| Merit Medical Systems |
TFI International and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Merit Medical
The main advantage of trading using opposite TFI International and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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