Correlation Between TFI International and XPO Logistics
Can any of the company-specific risk be diversified away by investing in both TFI International and XPO Logistics 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 XPO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and XPO Logistics, you can compare the effects of market volatilities on TFI International and XPO Logistics 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 XPO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and XPO Logistics.
Diversification Opportunities for TFI International and XPO Logistics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TFI and XPO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and XPO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPO Logistics 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 XPO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPO Logistics has no effect on the direction of TFI International i.e., TFI International and XPO Logistics go up and down completely randomly.
Pair Corralation between TFI International and XPO Logistics
Given the investment horizon of 90 days TFI International is expected to generate 2.27 times less return on investment than XPO Logistics. But when comparing it to its historical volatility, TFI International is 1.53 times less risky than XPO Logistics. It trades about 0.06 of its potential returns per unit of risk. XPO Logistics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,628 in XPO Logistics on August 26, 2024 and sell it today you would earn a total of 6,269 from holding XPO Logistics or generate 72.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFI International vs. XPO Logistics
Performance |
| Timeline |
| TFI International |
| XPO Logistics |
TFI International and XPO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and XPO Logistics
The main advantage of trading using opposite TFI International and XPO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International position performs unexpectedly, XPO Logistics 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 XPO Logistics will offset losses from the drop in XPO Logistics' long position.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Knight Transportation | TFI International vs. Universal Logistics Holdings |
| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
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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