Correlation Between Toronto Dominion and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Toronto Dominion and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and BCB Bancorp.
Diversification Opportunities for Toronto Dominion and BCB Bancorp
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Toronto and BCB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and BCB Bancorp go up and down completely randomly.
Pair Corralation between Toronto Dominion and BCB Bancorp
Allowing for the 90-day total investment horizon Toronto Dominion Bank is expected to under-perform the BCB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Toronto Dominion Bank is 1.53 times less risky than BCB Bancorp. The stock trades about -0.14 of its potential returns per unit of risk. The BCB Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,182 in BCB Bancorp on September 12, 2024 and sell it today you would earn a total of 81.00 from holding BCB Bancorp or generate 6.85% 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. BCB Bancorp
Performance |
| Timeline |
| Toronto Dominion Bank |
| BCB Bancorp |
Toronto Dominion and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and BCB Bancorp
The main advantage of trading using opposite Toronto Dominion and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Toronto Dominion vs. Citigroup | Toronto Dominion vs. Wells Fargo | Toronto Dominion vs. Nu Holdings | Toronto Dominion vs. HSBC Holdings PLC |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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