Correlation Between IGM Financial and Toronto Dominion
Can any of the company-specific risk be diversified away by investing in both IGM Financial 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 IGM Financial and Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Toronto Dominion Bank, you can compare the effects of market volatilities on IGM Financial 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 IGM Financial with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Toronto Dominion.
Diversification Opportunities for IGM Financial and Toronto Dominion
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IGM and Toronto is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial 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 IGM Financial 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 IGM Financial 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 IGM Financial i.e., IGM Financial and Toronto Dominion go up and down completely randomly.
Pair Corralation between IGM Financial and Toronto Dominion
Assuming the 90 days trading horizon IGM Financial is expected to generate 1.26 times more return on investment than Toronto Dominion. However, IGM Financial is 1.26 times more volatile than Toronto Dominion Bank. It trades about 0.15 of its potential returns per unit of risk. Toronto Dominion Bank is currently generating about 0.16 per unit of risk. If you would invest 3,222 in IGM Financial on September 4, 2024 and sell it today you would earn a total of 1,478 from holding IGM Financial or generate 45.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 83.4% |
| Values | Daily Returns |
IGM Financial vs. Toronto Dominion Bank
Performance |
| Timeline |
| IGM Financial |
| Toronto Dominion Bank |
IGM Financial and Toronto Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Toronto Dominion
The main advantage of trading using opposite IGM Financial and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial 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.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| Toronto Dominion vs. Apple Inc CDR | Toronto Dominion vs. Microsoft Corp CDR | Toronto Dominion vs. Amazon CDR | Toronto Dominion vs. Alphabet Inc CDR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |