Correlation Between Toronto Dominion and Anfield Resources
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Anfield Resources 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 Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toronto Dominion Bank Pref and Anfield Resources, you can compare the effects of market volatilities on Toronto Dominion and Anfield Resources 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 Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Anfield Resources.
Diversification Opportunities for Toronto Dominion and Anfield Resources
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Toronto and Anfield is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources 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 Pref are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Anfield Resources go up and down completely randomly.
Pair Corralation between Toronto Dominion and Anfield Resources
Assuming the 90 days trading horizon Toronto Dominion is expected to generate 10.68 times less return on investment than Anfield Resources. But when comparing it to its historical volatility, Toronto Dominion Bank Pref is 12.96 times less risky than Anfield Resources. It trades about 0.06 of its potential returns per unit of risk. Anfield Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Anfield Resources on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Anfield Resources or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank Pref vs. Anfield Resources
Performance |
| Timeline |
| Toronto Dominion Bank |
| Anfield Resources |
Toronto Dominion and Anfield Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Anfield Resources
The main advantage of trading using opposite Toronto Dominion and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Anfield Resources 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 Anfield Resources will offset losses from the drop in Anfield Resources' long position.| Toronto Dominion vs. Enbridge Pref 5 | Toronto Dominion vs. E Split Corp | Toronto Dominion vs. Sage Potash Corp |
| Anfield Resources vs. enCore Energy Corp | Anfield Resources vs. Fission 30 Corp | Anfield Resources vs. Forsys Metals Corp | Anfield Resources vs. Eros Resources Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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