Correlation Between Toronto Dominion and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Lion Electric 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 Lion Electric 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 Lion Electric Corp, you can compare the effects of market volatilities on Toronto Dominion and Lion Electric 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 Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Lion Electric.
Diversification Opportunities for Toronto Dominion and Lion Electric
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Toronto and Lion is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp 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 Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Lion Electric go up and down completely randomly.
Pair Corralation between Toronto Dominion and Lion Electric
Assuming the 90 days trading horizon Toronto Dominion Bank Pref is expected to generate 0.14 times more return on investment than Lion Electric. However, Toronto Dominion Bank Pref is 7.36 times less risky than Lion Electric. It trades about 0.08 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.13 per unit of risk. If you would invest 2,210 in Toronto Dominion Bank Pref on August 26, 2024 and sell it today you would earn a total of 394.00 from holding Toronto Dominion Bank Pref or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank Pref vs. Lion Electric Corp
Performance |
| Timeline |
| Toronto Dominion Bank |
| Lion Electric Corp |
Toronto Dominion and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Lion Electric
The main advantage of trading using opposite Toronto Dominion and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Toronto Dominion vs. Enbridge Pref 5 | Toronto Dominion vs. E Split Corp | Toronto Dominion vs. E Split Corp | Toronto Dominion vs. Sage Potash Corp |
| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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