Correlation Between Toronto Dominion and Hampton Financial
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Hampton Financial 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 Hampton Financial 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 Hampton Financial Corp, you can compare the effects of market volatilities on Toronto Dominion and Hampton Financial 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 Hampton Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Hampton Financial.
Diversification Opportunities for Toronto Dominion and Hampton Financial
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toronto and Hampton is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Hampton Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampton Financial 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 are associated (or correlated) with Hampton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampton Financial Corp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Hampton Financial go up and down completely randomly.
Pair Corralation between Toronto Dominion and Hampton Financial
Assuming the 90 days horizon Toronto Dominion Bank is expected to generate 0.37 times more return on investment than Hampton Financial. However, Toronto Dominion Bank is 2.71 times less risky than Hampton Financial. It trades about 0.0 of its potential returns per unit of risk. Hampton Financial Corp is currently generating about -0.02 per unit of risk. If you would invest 8,304 in Toronto Dominion Bank on October 27, 2024 and sell it today you would lose (89.00) from holding Toronto Dominion Bank or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank vs. Hampton Financial Corp
Performance |
| Timeline |
| Toronto Dominion Bank |
| Hampton Financial Corp |
Toronto Dominion and Hampton Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Hampton Financial
The main advantage of trading using opposite Toronto Dominion and Hampton Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Hampton Financial 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 Hampton Financial will offset losses from the drop in Hampton Financial's long position.| Toronto Dominion vs. Royal Bank of | Toronto Dominion vs. Bank of Nova | Toronto Dominion vs. Bank of Montreal | Toronto Dominion vs. Canadian Imperial Bank |
| Hampton Financial vs. Berkshire Hathaway CDR | Hampton Financial vs. Microsoft Corp CDR | Hampton Financial vs. Apple Inc CDR | Hampton Financial vs. Alphabet Inc CDR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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