Correlation Between TFI International and Tandem Diabetes

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

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

Diversification Opportunities for TFI International and Tandem Diabetes

-0.3

Correlation Coefficient

TFI International  Tandem Diabetes

Very good diversification

The 3 months correlation between TFI and Tandem is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care 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 Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of TFI International i.e., TFI International and Tandem Diabetes go up and down completely randomly.

Pair Corralation between TFI International and Tandem Diabetes

Given the investment horizon of 90 days TFI International is expected to generate 0.54 times more return on investment than Tandem Diabetes. However, TFI International is 1.84 times less risky than Tandem Diabetes. It trades about 0.0 of its potential returns per unit of risk. Tandem Diabetes Care is currently generating about -0.06 per unit of risk. If you would invest  14,373  in TFI International on September 25, 2024 and sell it today you would lose (246.00) from holding TFI International or give up 1.71% of portfolio value over 90 days.

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

TFI International  vs.  Tandem Diabetes Care

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Tandem Diabetes Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tandem Diabetes Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with TFI International and Tandem Diabetes

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

The idea behind TFI International and Tandem Diabetes Care 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.