Correlation Between CIBC Core and TD Canadian
Can any of the company-specific risk be diversified away by investing in both CIBC Core and TD Canadian 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 CIBC Core and TD Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Core Fixed and TD Canadian Aggregate, you can compare the effects of market volatilities on CIBC Core and TD Canadian 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 CIBC Core with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Core and TD Canadian.
Diversification Opportunities for CIBC Core and TD Canadian
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CIBC and TDB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Core Fixed and TD Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Aggregate and CIBC Core 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 CIBC Core Fixed are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Aggregate has no effect on the direction of CIBC Core i.e., CIBC Core and TD Canadian go up and down completely randomly.
Pair Corralation between CIBC Core and TD Canadian
Assuming the 90 days trading horizon CIBC Core is expected to generate 1.67 times less return on investment than TD Canadian. But when comparing it to its historical volatility, CIBC Core Fixed is 1.26 times less risky than TD Canadian. It trades about 0.14 of its potential returns per unit of risk. TD Canadian Aggregate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,301 in TD Canadian Aggregate on September 3, 2024 and sell it today you would earn a total of 22.00 from holding TD Canadian Aggregate or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIBC Core Fixed vs. TD Canadian Aggregate
Performance |
| Timeline |
| CIBC Core Fixed |
| TD Canadian Aggregate |
CIBC Core and TD Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Core and TD Canadian
The main advantage of trading using opposite CIBC Core and TD Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Core position performs unexpectedly, TD Canadian 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 TD Canadian will offset losses from the drop in TD Canadian's long position.| CIBC Core vs. CIBC Canadian Equity | CIBC Core vs. CIBC Clean Energy | CIBC Core vs. CIBC Conservative Fixed | CIBC Core vs. CIBC Qx Low |
| TD Canadian vs. BMO Short Corporate | TD Canadian vs. BMO High Yield | TD Canadian vs. iShares Core Canadian | TD Canadian vs. Harvest Global REIT |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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