Correlation Between Applied Materials and Toronto-Dominion
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Toronto-Dominion 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 Applied Materials and Toronto-Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and The Toronto Dominion Bank, you can compare the effects of market volatilities on Applied Materials and Toronto-Dominion 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 Applied Materials with a short position of Toronto-Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Toronto-Dominion.
Diversification Opportunities for Applied Materials and Toronto-Dominion
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Toronto-Dominion is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and The Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion and Applied Materials 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 Applied Materials are associated (or correlated) with Toronto-Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion has no effect on the direction of Applied Materials i.e., Applied Materials and Toronto-Dominion go up and down completely randomly.
Pair Corralation between Applied Materials and Toronto-Dominion
Assuming the 90 days horizon Applied Materials is expected to generate 2.19 times more return on investment than Toronto-Dominion. However, Applied Materials is 2.19 times more volatile than The Toronto Dominion Bank. It trades about 0.05 of its potential returns per unit of risk. The Toronto Dominion Bank is currently generating about 0.01 per unit of risk. If you would invest 13,336 in Applied Materials on September 2, 2024 and sell it today you would earn a total of 3,542 from holding Applied Materials or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. The Toronto Dominion Bank
Performance |
| Timeline |
| Applied Materials |
| Toronto Dominion |
Applied Materials and Toronto-Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Toronto-Dominion
The main advantage of trading using opposite Applied Materials and Toronto-Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Toronto-Dominion 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 Toronto-Dominion will offset losses from the drop in Toronto-Dominion's long position.| Applied Materials vs. PLAYTECH | Applied Materials vs. China BlueChemical | Applied Materials vs. ANTA SPORTS PRODUCT | Applied Materials vs. Sekisui Chemical Co |
| Toronto-Dominion vs. Verizon Communications | Toronto-Dominion vs. ATRESMEDIA | Toronto-Dominion vs. Ribbon Communications | Toronto-Dominion vs. Citic Telecom International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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