Correlation Between Toronto Dominion and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and NexGen Energy 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 NexGen Energy 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 NexGen Energy, you can compare the effects of market volatilities on Toronto Dominion and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and NexGen Energy.
Diversification Opportunities for Toronto Dominion and NexGen Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Toronto and NexGen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and NexGen Energy go up and down completely randomly.
Pair Corralation between Toronto Dominion and NexGen Energy
Assuming the 90 days horizon Toronto Dominion is expected to generate 5.44 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, Toronto Dominion Bank is 3.74 times less risky than NexGen Energy. It trades about 0.17 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,024 in NexGen Energy on September 1, 2024 and sell it today you would earn a total of 167.00 from holding NexGen Energy or generate 16.31% 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 vs. NexGen Energy
Performance |
| Timeline |
| Toronto Dominion Bank |
| NexGen Energy |
Toronto Dominion and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and NexGen Energy
The main advantage of trading using opposite Toronto Dominion and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy'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 |
| NexGen Energy vs. Fission Uranium Corp | NexGen Energy vs. Denison Mines Corp | NexGen Energy vs. Energy Fuels | NexGen Energy vs. enCore Energy Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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