Correlation Between Capital Power and TFI International

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

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

Diversification Opportunities for Capital Power and TFI International

0.75

Correlation Coefficient

Capital Power  TFI International

Poor diversification

The 3 months correlation between Capital and TFI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Capital Power 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 Capital Power 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 Capital Power i.e., Capital Power and TFI International go up and down completely randomly.

Pair Corralation between Capital Power and TFI International

Assuming the 90 days trading horizon Capital Power is expected to generate 0.57 times more return on investment than TFI International. However, Capital Power is 1.76 times less risky than TFI International. It trades about 0.34 of its potential returns per unit of risk. TFI International is currently generating about 0.1 per unit of risk. If you would invest  4,621  in Capital Power on April 20, 2025 and sell it today you would earn a total of  1,429  from holding Capital Power or generate 30.92% return on investment over 90 days.

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

Capital Power  vs.  TFI International

Capital Power

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Power are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Capital Power displayed solid returns over the last few months and may actually be approaching a breakup point.

TFI International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TFI International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Power and TFI International

The main advantage of trading using opposite Capital Power and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Power 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 Capital Power 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.