Correlation Between Mackenzie International and TD International
Can any of the company-specific risk be diversified away by investing in both Mackenzie International and TD International 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 Mackenzie International and TD International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie International Equity and TD International Equity, you can compare the effects of market volatilities on Mackenzie International and TD International 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 Mackenzie International with a short position of TD International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie International and TD International.
Diversification Opportunities for Mackenzie International and TD International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mackenzie and THE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie International Equity and TD International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD International Equity and Mackenzie International 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 Mackenzie International Equity are associated (or correlated) with TD International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD International Equity has no effect on the direction of Mackenzie International i.e., Mackenzie International and TD International go up and down completely randomly.
Pair Corralation between Mackenzie International and TD International
Assuming the 90 days trading horizon Mackenzie International Equity is expected to generate 1.48 times more return on investment than TD International. However, Mackenzie International is 1.48 times more volatile than TD International Equity. It trades about 0.17 of its potential returns per unit of risk. TD International Equity is currently generating about 0.2 per unit of risk. If you would invest 11,995 in Mackenzie International Equity on November 7, 2024 and sell it today you would earn a total of 382.00 from holding Mackenzie International Equity or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie International Equity vs. TD International Equity
Performance |
| Timeline |
| Mackenzie International |
| TD International Equity |
Mackenzie International and TD International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie International and TD International
The main advantage of trading using opposite Mackenzie International and TD International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie International position performs unexpectedly, TD International 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 International will offset losses from the drop in TD International's long position.The idea behind Mackenzie International Equity and TD International Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| TD International vs. TD International Equity | TD International vs. TD Equity CAD | TD International vs. TD Canadian Equity | TD International vs. TD Canadian Aggregate |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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