Correlation Between TD Canadian and First Trust
Can any of the company-specific risk be diversified away by investing in both TD Canadian and First Trust 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 TD Canadian and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Canadian Long and First Trust Dow, you can compare the effects of market volatilities on TD Canadian and First Trust 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 TD Canadian with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and First Trust.
Diversification Opportunities for TD Canadian and First Trust
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TCLB and First is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and First Trust Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dow and TD Canadian 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 TD Canadian Long are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dow has no effect on the direction of TD Canadian i.e., TD Canadian and First Trust go up and down completely randomly.
Pair Corralation between TD Canadian and First Trust
Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, TD Canadian Long is 1.71 times less risky than First Trust. The etf trades about -0.04 of its potential returns per unit of risk. The First Trust Dow is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,188 in First Trust Dow on August 28, 2024 and sell it today you would earn a total of 552.00 from holding First Trust Dow or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TD Canadian Long vs. First Trust Dow
Performance |
| Timeline |
| TD Canadian Long |
| First Trust Dow |
TD Canadian and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Canadian and First Trust
The main advantage of trading using opposite TD Canadian and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Canadian position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| TD Canadian vs. NBI High Yield | TD Canadian vs. NBI Unconstrained Fixed | TD Canadian vs. Mackenzie Developed ex North | TD Canadian vs. BMO Short Term Bond |
| First Trust vs. First Trust NASDAQ | First Trust vs. First Trust Cloud | First Trust vs. Global X Industry | First Trust vs. First Trust NYSE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |