Correlation Between NIKE and Toronto Dominion
Can any of the company-specific risk be diversified away by investing in both NIKE 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 NIKE and Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc CDR and Toronto Dominion Bank Pref, you can compare the effects of market volatilities on NIKE 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 NIKE with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Toronto Dominion.
Diversification Opportunities for NIKE and Toronto Dominion
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NIKE and Toronto is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and Toronto Dominion Bank Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and NIKE 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 NIKE Inc CDR 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 NIKE i.e., NIKE and Toronto Dominion go up and down completely randomly.
Pair Corralation between NIKE and Toronto Dominion
Assuming the 90 days trading horizon NIKE Inc CDR is expected to under-perform the Toronto Dominion. In addition to that, NIKE is 4.55 times more volatile than Toronto Dominion Bank Pref. It trades about -0.05 of its total potential returns per unit of risk. Toronto Dominion Bank Pref is currently generating about 0.11 per unit of volatility. If you would invest 2,583 in Toronto Dominion Bank Pref on August 26, 2024 and sell it today you would earn a total of 21.00 from holding Toronto Dominion Bank Pref or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKE Inc CDR vs. Toronto Dominion Bank Pref
Performance |
| Timeline |
| NIKE Inc CDR |
| Toronto Dominion Bank |
NIKE and Toronto Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Toronto Dominion
The main advantage of trading using opposite NIKE and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE 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.| NIKE vs. Costco Wholesale Corp | NIKE vs. Solid Impact Investments | NIKE vs. Doman Building Materials | NIKE vs. Chemtrade Logistics Income |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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