Correlation Between TD Canadian and Global X
Can any of the company-specific risk be diversified away by investing in both TD Canadian and Global X 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 Global X 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 Global X Pipelines, you can compare the effects of market volatilities on TD Canadian and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and Global X.
Diversification Opportunities for TD Canadian and Global X
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TCLB and Global is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and Global X Pipelines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Pipelines 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Pipelines has no effect on the direction of TD Canadian i.e., TD Canadian and Global X go up and down completely randomly.
Pair Corralation between TD Canadian and Global X
Assuming the 90 days trading horizon TD Canadian is expected to generate 1.58 times less return on investment than Global X. But when comparing it to its historical volatility, TD Canadian Long is 1.43 times less risky than Global X. It trades about 0.19 of its potential returns per unit of risk. Global X Pipelines is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,129 in Global X Pipelines on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Global X Pipelines or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
TD Canadian Long vs. Global X Pipelines
Performance |
| Timeline |
| TD Canadian Long |
| Global X Pipelines |
TD Canadian and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Canadian and Global X
The main advantage of trading using opposite TD Canadian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Canadian position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X'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 |
| Global X vs. CI Gold Giants | Global X vs. First Asset Tech | Global X vs. CI Canada Lifeco | Global X vs. Harvest Healthcare Leaders |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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