Correlation Between Global X and TD Equity
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and TD Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SP and TD Equity CAD, you can compare the effects of market volatilities on Global X 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 Global X with a short position of TD Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and TD Equity.
Diversification Opportunities for Global X and TD Equity
Almost no diversification
The 3 months correlation between Global and THU is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP 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 Global X 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 Global X SP 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 Global X i.e., Global X and TD Equity go up and down completely randomly.
Pair Corralation between Global X and TD Equity
Assuming the 90 days trading horizon Global X SP is expected to generate 1.05 times more return on investment than TD Equity. However, Global X is 1.05 times more volatile than TD Equity CAD. It trades about 0.34 of its potential returns per unit of risk. TD Equity CAD is currently generating about 0.33 per unit of risk. If you would invest 8,128 in Global X SP on September 1, 2024 and sell it today you would earn a total of 528.00 from holding Global X SP or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X SP vs. TD Equity CAD
Performance |
| Timeline |
| Global X SP |
| TD Equity CAD |
Global X and TD Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and TD Equity
The main advantage of trading using opposite Global X and TD Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. BMO SP 500 | Global X vs. Vanguard SP 500 | Global X vs. iShares Core SP | Global X vs. BMO SP 500 |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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