Correlation Between Toronto Dominion and First Majestic
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and First Majestic 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 First Majestic 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 First Majestic Silver, you can compare the effects of market volatilities on Toronto Dominion and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and First Majestic.
Diversification Opportunities for Toronto Dominion and First Majestic
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Toronto and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and First Majestic go up and down completely randomly.
Pair Corralation between Toronto Dominion and First Majestic
Assuming the 90 days trading horizon Toronto Dominion Bank is expected to generate 0.09 times more return on investment than First Majestic. However, Toronto Dominion Bank is 11.24 times less risky than First Majestic. It trades about 0.46 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.25 per unit of risk. If you would invest 2,385 in Toronto Dominion Bank on September 2, 2024 and sell it today you would earn a total of 42.00 from holding Toronto Dominion Bank or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Toronto Dominion Bank vs. First Majestic Silver
Performance |
| Timeline |
| Toronto Dominion Bank |
| First Majestic Silver |
Toronto Dominion and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and First Majestic
The main advantage of trading using opposite Toronto Dominion and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, First Majestic 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 Majestic will offset losses from the drop in First Majestic's long position.| Toronto Dominion vs. Fairfax Financial Holdings | Toronto Dominion vs. iShares Canadian HYBrid | Toronto Dominion vs. Brompton European Dividend | Toronto Dominion vs. Solar Alliance Energy |
| First Majestic vs. Converge Technology Solutions | First Majestic vs. Firan Technology Group | First Majestic vs. Broadcom | First Majestic vs. Perseus Mining |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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