Correlation Between Toronto Dominion and NFI
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and NFI 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 NFI 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 NFI Group, you can compare the effects of market volatilities on Toronto Dominion and NFI 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 NFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and NFI.
Diversification Opportunities for Toronto Dominion and NFI
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Toronto and NFI is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group 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 NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and NFI go up and down completely randomly.
Pair Corralation between Toronto Dominion and NFI
Assuming the 90 days horizon Toronto Dominion Bank is expected to generate 0.23 times more return on investment than NFI. However, Toronto Dominion Bank is 4.33 times less risky than NFI. It trades about 0.18 of its potential returns per unit of risk. NFI Group is currently generating about -0.02 per unit of risk. If you would invest 8,254 in Toronto Dominion Bank on November 29, 2024 and sell it today you would earn a total of 313.00 from holding Toronto Dominion Bank or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank vs. NFI Group
Performance |
| Timeline |
| Toronto Dominion Bank |
| NFI Group |
Toronto Dominion and NFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and NFI
The main advantage of trading using opposite Toronto Dominion and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, NFI 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 NFI will offset losses from the drop in NFI'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 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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