Correlation Between BetaPro SP and TD Equity
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and TD Equity 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 BetaPro SP and TD Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP 500 and TD Equity CAD, you can compare the effects of market volatilities on BetaPro SP and TD Equity 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 BetaPro SP with a short position of TD Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and TD Equity.
Diversification Opportunities for BetaPro SP and TD Equity
-0.99 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and THU is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and TD Equity CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Equity CAD and BetaPro SP 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 BetaPro SP 500 are associated (or correlated) with TD Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Equity CAD has no effect on the direction of BetaPro SP i.e., BetaPro SP and TD Equity go up and down completely randomly.
Pair Corralation between BetaPro SP and TD Equity
Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the TD Equity. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.03 times less risky than TD Equity. The etf trades about -0.3 of its potential returns per unit of risk. The TD Equity CAD is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,807 in TD Equity CAD on September 1, 2024 and sell it today you would earn a total of 238.00 from holding TD Equity CAD or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BetaPro SP 500 vs. TD Equity CAD
Performance |
| Timeline |
| BetaPro SP 500 |
| TD Equity CAD |
BetaPro SP and TD Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and TD Equity
The main advantage of trading using opposite BetaPro SP and TD Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, TD Equity 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 Equity will offset losses from the drop in TD Equity's long position.| BetaPro SP vs. BetaPro SPTSX 60 | BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro Gold Bullion |
| TD Equity vs. BMO SP 500 | TD Equity vs. Vanguard SP 500 | TD Equity vs. iShares Core SP | TD Equity vs. BMO SP 500 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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