Correlation Between Nationstar and TFI International

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

By analyzing existing cross correlation between Nationstar Mortgage 55 and TFI International, you can compare the effects of market volatilities on Nationstar 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 Nationstar with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationstar and TFI International.

Diversification Opportunities for Nationstar and TFI International

-0.31

Correlation Coefficient

Nationstar  TFI International

Very good diversification

The 3 months correlation between Nationstar and TFI is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nationstar Mortgage 55 and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Nationstar 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 Nationstar Mortgage 55 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 Nationstar i.e., Nationstar and TFI International go up and down completely randomly.

Pair Corralation between Nationstar and TFI International

Assuming the 90 days trading horizon Nationstar Mortgage 55 is expected to under-perform the TFI International. But the bond apears to be less risky and, when comparing its historical volatility, Nationstar Mortgage 55 is 4.66 times less risky than TFI International. The bond trades about -0.12 of its potential returns per unit of risk. The TFI International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14,582  in TFI International on September 2, 2024 and sell it today you would earn a total of  586.00  from holding TFI International or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Nationstar Mortgage 55  vs.  TFI International

Nationstar Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationstar Mortgage 55 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nationstar is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

TFI International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Nationstar and TFI International

The main advantage of trading using opposite Nationstar and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationstar 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 Nationstar Mortgage 55 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.