Correlation Between TFI International and Nexstar Broadcasting

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

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

Diversification Opportunities for TFI International and Nexstar Broadcasting

0.17

Correlation Coefficient

TFI International  Nexstar Broadcasting

Average diversification

The 3 months correlation between TFI and Nexstar is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of TFI International i.e., TFI International and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between TFI International and Nexstar Broadcasting

Given the investment horizon of 90 days TFI International is expected to generate 1.05 times more return on investment than Nexstar Broadcasting. However, TFI International is 1.05 times more volatile than Nexstar Broadcasting Group. It trades about 0.16 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.0 per unit of risk. If you would invest  14,794  in TFI International on September 12, 2024 and sell it today you would earn a total of  572.00  from holding TFI International or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

TFI International  vs.  Nexstar Broadcasting Group

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.

Nexstar Broadcasting

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Broadcasting Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nexstar Broadcasting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TFI International and Nexstar Broadcasting

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

The idea behind TFI International and Nexstar Broadcasting Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.