Correlation Between BCE and TFI International

Can any of the company-specific risk be diversified away by investing in both BCE and TFI International 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 BCE and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and TFI International, you can compare the effects of market volatilities on BCE and TFI International 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 BCE with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and TFI International.

Diversification Opportunities for BCE and TFI International

-0.66

Correlation Coefficient

BCE  TFI International

Excellent diversification

The 3 months correlation between BCE and TFI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and BCE 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 BCE Inc are associated (or correlated) with TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of BCE i.e., BCE and TFI International go up and down completely randomly.

Pair Corralation between BCE and TFI International

Considering the 90-day investment horizon BCE Inc is expected to under-perform the TFI International. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.15 times less risky than TFI International. The stock trades about -0.45 of its potential returns per unit of risk. The TFI International is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  14,873  in TFI International on September 23, 2024 and sell it today you would lose (1,048) from holding TFI International or give up 7.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BCE Inc  vs.  TFI International

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

TFI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, TFI International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BCE and TFI International

The main advantage of trading using opposite BCE and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.

The idea behind BCE Inc and TFI International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.