Correlation Between Sumitomo Mitsui and Toronto Dominion
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Toronto Dominion Bank, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Toronto Dominion.
Diversification Opportunities for Sumitomo Mitsui and Toronto Dominion
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Toronto is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Toronto Dominion go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Toronto Dominion
Given the investment horizon of 90 days Sumitomo Mitsui Financial is expected to generate 1.55 times more return on investment than Toronto Dominion. However, Sumitomo Mitsui is 1.55 times more volatile than Toronto Dominion Bank. It trades about 0.09 of its potential returns per unit of risk. Toronto Dominion Bank is currently generating about -0.01 per unit of risk. If you would invest 647.00 in Sumitomo Mitsui Financial on August 23, 2024 and sell it today you would earn a total of 750.00 from holding Sumitomo Mitsui Financial or generate 115.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Toronto Dominion Bank
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Toronto Dominion Bank |
Sumitomo Mitsui and Toronto Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Toronto Dominion
The main advantage of trading using opposite Sumitomo Mitsui and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
| Toronto Dominion vs. Bank of Montreal | Toronto Dominion vs. Canadian Imperial Bank | Toronto Dominion vs. Bank of Nova | Toronto Dominion vs. JPMorgan Chase Co |
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..
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |