Correlation Between Toronto Dominion and Stantec
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Stantec 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 Toronto Dominion and Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toronto Dominion Bank and Stantec, you can compare the effects of market volatilities on Toronto Dominion and Stantec 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 Toronto Dominion with a short position of Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Stantec.
Diversification Opportunities for Toronto Dominion and Stantec
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and Stantec is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and Toronto Dominion 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 Toronto Dominion Bank are associated (or correlated) with Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Stantec go up and down completely randomly.
Pair Corralation between Toronto Dominion and Stantec
Assuming the 90 days trading horizon Toronto Dominion Bank is expected to generate 0.2 times more return on investment than Stantec. However, Toronto Dominion Bank is 4.95 times less risky than Stantec. It trades about -0.04 of its potential returns per unit of risk. Stantec is currently generating about -0.01 per unit of risk. If you would invest 2,475 in Toronto Dominion Bank on November 3, 2024 and sell it today you would lose (6.00) from holding Toronto Dominion Bank or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank vs. Stantec
Performance |
| Timeline |
| Toronto Dominion Bank |
| Stantec |
Toronto Dominion and Stantec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Stantec
The main advantage of trading using opposite Toronto Dominion and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Stantec 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 Stantec will offset losses from the drop in Stantec's long position.| Toronto Dominion vs. Northstar Clean Technologies | Toronto Dominion vs. CI Financial Corp | Toronto Dominion vs. Laurentian Bank | Toronto Dominion vs. Canso Credit Trust |
| Stantec vs. Toromont Industries | Stantec vs. WSP Global | Stantec vs. Ritchie Bros Auctioneers | Stantec vs. Stella Jones |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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