Correlation Between TFI International and American Education

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

By analyzing existing cross correlation between TFI International and American Education Center, you can compare the effects of market volatilities on TFI International and American Education 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 American Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and American Education.

Diversification Opportunities for TFI International and American Education

-0.62

Correlation Coefficient

TFI International  American Education

Excellent diversification

The 3 months correlation between TFI and American is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and American Education Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Education Center 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 American Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Education Center has no effect on the direction of TFI International i.e., TFI International and American Education go up and down completely randomly.

Pair Corralation between TFI International and American Education

If you would invest  14,252  in TFI International on September 12, 2024 and sell it today you would earn a total of  1,114  from holding TFI International or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

TFI International  vs.  American Education Center

TFI International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Education Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Education Center has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, American Education is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TFI International and American Education

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

The idea behind TFI International and American Education Center 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.