Correlation Between Toronto Dominion and Apple
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Apple 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 Apple 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 Apple Inc CDR, you can compare the effects of market volatilities on Toronto Dominion and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Apple.
Diversification Opportunities for Toronto Dominion and Apple
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Toronto and Apple is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Apple go up and down completely randomly.
Pair Corralation between Toronto Dominion and Apple
Assuming the 90 days trading horizon Toronto Dominion Bank is expected to generate 0.3 times more return on investment than Apple. However, Toronto Dominion Bank is 3.37 times less risky than Apple. It trades about -0.1 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.11 per unit of risk. If you would invest 2,474 in Toronto Dominion Bank on November 1, 2024 and sell it today you would lose (28.00) from holding Toronto Dominion Bank or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Toronto Dominion Bank vs. Apple Inc CDR
Performance |
| Timeline |
| Toronto Dominion Bank |
| Apple Inc CDR |
Toronto Dominion and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Apple
The main advantage of trading using opposite Toronto Dominion and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Toronto Dominion vs. Questor Technology | Toronto Dominion vs. Leading Edge Materials | Toronto Dominion vs. Profound Medical Corp | Toronto Dominion vs. Medical Facilities |
| Apple vs. Toronto Dominion Bank | Apple vs. Fairfax Financial Holdings | Apple vs. Renoworks Software | Apple vs. Rogers Communications |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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