Correlation Between Toronto Dominion and Digihost Technology

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Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Digihost Technology 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 Digihost Technology 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 Digihost Technology, you can compare the effects of market volatilities on Toronto Dominion and Digihost Technology 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 Digihost Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Digihost Technology.

Diversification Opportunities for Toronto Dominion and Digihost Technology

TorontoDigihostDiversified AwayTorontoDigihostDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Toronto and Digihost is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology 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 Digihost Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digihost Technology has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Digihost Technology go up and down completely randomly.

Pair Corralation between Toronto Dominion and Digihost Technology

Assuming the 90 days horizon Toronto Dominion Bank is expected to generate 0.1 times more return on investment than Digihost Technology. However, Toronto Dominion Bank is 10.11 times less risky than Digihost Technology. It trades about 0.17 of its potential returns per unit of risk. Digihost Technology is currently generating about -0.13 per unit of risk. If you would invest  8,215  in Toronto Dominion Bank on November 25, 2024 and sell it today you would earn a total of  297.00  from holding Toronto Dominion Bank or generate 3.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Toronto Dominion Bank  vs.  Digihost Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20020406080100120
JavaScript chart by amCharts 3.21.15TD DGHI
       Timeline  
Toronto Dominion Bank 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Toronto Dominion may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7274767880828486
Digihost Technology 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Digihost Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, Digihost Technology showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22.533.544.555.5

Toronto Dominion and Digihost Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.06-3.04-2.02-1.00.01.062.133.214.28 0.050.100.150.20
JavaScript chart by amCharts 3.21.15TD DGHI
       Returns  

Pair Trading with Toronto Dominion and Digihost Technology

The main advantage of trading using opposite Toronto Dominion and Digihost Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Digihost Technology 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 Digihost Technology will offset losses from the drop in Digihost Technology's long position.
The idea behind Toronto Dominion Bank and Digihost Technology 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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