78.87 -2.08 (-2.64%) Sell

CNI is a falling knife, continues to bleed every investor trying to catch it

13 min read

CANADIAN NATIONAL RAILWAY CO (Foreign) ranked among the worst performers on Friday. It delivered -2.64% to close at 78.87. It is currently trading -13% below it's 52 week high of 91.4.

[Themes containing CNI]

CNI is currently in a bearish trend. Over the last three months 3 bearish signals have generated a profit of +1.78% for investors.


CNI has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 20 Jan, 2016 to 12 Jul, 2017. Over the last 2 years 11 months and 3 days, CNI outperformed the SP500 index on 53% days.

During the last three months CNI delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.75%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -5.85%) was on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 25 Sep, 2018 and went on till 1 Oct, 2018. This bullish trend returned +5.19% to investors.

The last 12 months saw CNI's investors making profits in 5 months and incurring losses in 7 months. CNI was less consistent in delivering monthly returs than SP500 index. CNI significantly outperformed SP500 index in Jul 2018, when it returned +8.92% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CNI had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -12.7%. It is interesting to note that both CNI and SP500 index significantly outperform during months when quarterly/annual results are announced.

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CNI is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in CNI's volatility from 17 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CNI has significant positive skewness in it's return distribution. This indicates that investors can expect CNI to recover from drawdowns quickly. Which makes CNI a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

CNI has more chance of extreme outcomes than the SP500 index. Therefore, CNI must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than CNI.

Based on your interest in CNI you may find it interesting to know that ICPT, NVCN and IMTE are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.

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