Correlation Between Toronto Dominion and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Toronto Dominion and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Restaurant Brands.
Diversification Opportunities for Toronto Dominion and Restaurant Brands
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and Restaurant is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Restaurant Brands go up and down completely randomly.
Pair Corralation between Toronto Dominion and Restaurant Brands
Assuming the 90 days horizon Toronto Dominion Bank is expected to under-perform the Restaurant Brands. In addition to that, Toronto Dominion is 1.75 times more volatile than Restaurant Brands International. It trades about -0.05 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about -0.06 per unit of volatility. If you would invest 9,731 in Restaurant Brands International on September 26, 2024 and sell it today you would lose (137.00) from holding Restaurant Brands International or give up 1.41% 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. Restaurant Brands Internationa
Performance |
| Timeline |
| Toronto Dominion Bank |
| Restaurant Brands |
Toronto Dominion and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Restaurant Brands
The main advantage of trading using opposite Toronto Dominion and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' 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 |
| Restaurant Brands vs. JPMorgan Chase Co | Restaurant Brands vs. Toronto Dominion Bank | Restaurant Brands vs. Royal Bank of | Restaurant Brands vs. Royal Bank of |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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