Correlation Between Toronto Dominion and Canada Goose
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Canada Goose 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 Canada Goose 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 Canada Goose Holdings, you can compare the effects of market volatilities on Toronto Dominion and Canada Goose 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 Canada Goose. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Canada Goose.
Diversification Opportunities for Toronto Dominion and Canada Goose
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and Canada is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings 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 Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Canada Goose go up and down completely randomly.
Pair Corralation between Toronto Dominion and Canada Goose
Assuming the 90 days trading horizon Toronto Dominion Bank Pref is expected to generate 0.18 times more return on investment than Canada Goose. However, Toronto Dominion Bank Pref is 5.67 times less risky than Canada Goose. It trades about 0.06 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.12 per unit of risk. If you would invest 2,576 in Toronto Dominion Bank Pref on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Toronto Dominion Bank Pref or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank Pref vs. Canada Goose Holdings
Performance |
| Timeline |
| Toronto Dominion Bank |
| Canada Goose Holdings |
Toronto Dominion and Canada Goose Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Canada Goose
The main advantage of trading using opposite Toronto Dominion and Canada Goose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Canada Goose 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 Canada Goose will offset losses from the drop in Canada Goose's long position.The idea behind Toronto Dominion Bank Pref and Canada Goose Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canada Goose vs. Aritzia | Canada Goose vs. Restaurant Brands International | Canada Goose vs. Dollarama | Canada Goose vs. Shopify |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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