Correlation Between Canadian General and Toronto Dominion
Can any of the company-specific risk be diversified away by investing in both Canadian General 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 Canadian General and Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Toronto Dominion Bank, you can compare the effects of market volatilities on Canadian General 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 Canadian General with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Toronto Dominion.
Diversification Opportunities for Canadian General and Toronto Dominion
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Toronto is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and Canadian General 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 Canadian General Investments 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 Bank has no effect on the direction of Canadian General i.e., Canadian General and Toronto Dominion go up and down completely randomly.
Pair Corralation between Canadian General and Toronto Dominion
Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Toronto Dominion. In addition to that, Canadian General is 2.08 times more volatile than Toronto Dominion Bank. It trades about -0.06 of its total potential returns per unit of risk. Toronto Dominion Bank is currently generating about 0.11 per unit of volatility. If you would invest 2,413 in Toronto Dominion Bank on September 14, 2024 and sell it today you would earn a total of 23.00 from holding Toronto Dominion Bank or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Toronto Dominion Bank
Performance |
| Timeline |
| Canadian General Inv |
| Toronto Dominion Bank |
Canadian General and Toronto Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Toronto Dominion
The main advantage of trading using opposite Canadian General and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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.| Canadian General vs. Uniteds Limited | Canadian General vs. Economic Investment Trust | Canadian General vs. abrdn Asia Pacific | Canadian General vs. Clairvest Group |
| Toronto Dominion vs. High Liner Foods | Toronto Dominion vs. Canaf Investments | Toronto Dominion vs. Canadian General Investments | Toronto Dominion vs. Atrium Mortgage 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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