Correlation Between TD Canadian and Mackenzie TIPS
Can any of the company-specific risk be diversified away by investing in both TD Canadian and Mackenzie TIPS 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 Mackenzie TIPS 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 Mackenzie TIPS Index, you can compare the effects of market volatilities on TD Canadian and Mackenzie TIPS 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 Mackenzie TIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and Mackenzie TIPS.
Diversification Opportunities for TD Canadian and Mackenzie TIPS
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TCLB and Mackenzie is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and Mackenzie TIPS Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie TIPS Index 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 Mackenzie TIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie TIPS Index has no effect on the direction of TD Canadian i.e., TD Canadian and Mackenzie TIPS go up and down completely randomly.
Pair Corralation between TD Canadian and Mackenzie TIPS
Assuming the 90 days trading horizon TD Canadian Long is expected to generate 2.75 times more return on investment than Mackenzie TIPS. However, TD Canadian is 2.75 times more volatile than Mackenzie TIPS Index. It trades about 0.09 of its potential returns per unit of risk. Mackenzie TIPS Index is currently generating about -0.04 per unit of risk. If you would invest 11,873 in TD Canadian Long on August 29, 2024 and sell it today you would earn a total of 167.00 from holding TD Canadian Long or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TD Canadian Long vs. Mackenzie TIPS Index
Performance |
| Timeline |
| TD Canadian Long |
| Mackenzie TIPS Index |
TD Canadian and Mackenzie TIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Canadian and Mackenzie TIPS
The main advantage of trading using opposite TD Canadian and Mackenzie TIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Canadian position performs unexpectedly, Mackenzie TIPS 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 Mackenzie TIPS will offset losses from the drop in Mackenzie TIPS'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 |
| Mackenzie TIPS vs. Mackenzie Developed ex North | Mackenzie TIPS vs. Mackenzie Global Sustainable | Mackenzie TIPS vs. Mackenzie Aggregate Bond | Mackenzie TIPS vs. Mackenzie Canadian Ultra |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |