Correlation Between Toronto Dominion and Westaim Corp
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Westaim Corp 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 Westaim Corp 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 Westaim Corp, you can compare the effects of market volatilities on Toronto Dominion and Westaim Corp 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 Westaim Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Westaim Corp.
Diversification Opportunities for Toronto Dominion and Westaim Corp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Toronto and Westaim is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Westaim Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westaim 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 Westaim Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westaim Corp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Westaim Corp go up and down completely randomly.
Pair Corralation between Toronto Dominion and Westaim Corp
Assuming the 90 days horizon Toronto Dominion Bank is expected to under-perform the Westaim Corp. But the stock apears to be less risky and, when comparing its historical volatility, Toronto Dominion Bank is 1.28 times less risky than Westaim Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Westaim Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 488.00 in Westaim Corp on August 27, 2024 and sell it today you would earn a total of 16.00 from holding Westaim Corp or generate 3.28% 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. Westaim Corp
Performance |
| Timeline |
| Toronto Dominion Bank |
| Westaim Corp |
Toronto Dominion and Westaim Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Westaim Corp
The main advantage of trading using opposite Toronto Dominion and Westaim Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Westaim Corp 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 Westaim Corp will offset losses from the drop in Westaim Corp'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 |
| Westaim Corp vs. Pulse Seismic | Westaim Corp vs. Quarterhill | Westaim Corp vs. Kneat Inc | Westaim Corp vs. Trisura Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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