Correlation Between Toronto Dominion and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Nu Holdings 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 Nu Holdings 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 Nu Holdings, you can compare the effects of market volatilities on Toronto Dominion and Nu Holdings 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 Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Nu Holdings.
Diversification Opportunities for Toronto Dominion and Nu Holdings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and Nu Holdings is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings 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 Nu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Holdings has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Nu Holdings go up and down completely randomly.
Pair Corralation between Toronto Dominion and Nu Holdings
Allowing for the 90-day total investment horizon Toronto Dominion Bank is expected to under-perform the Nu Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Toronto Dominion Bank is 2.08 times less risky than Nu Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Nu Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 406.00 in Nu Holdings on August 26, 2024 and sell it today you would earn a total of 985.00 from holding Nu Holdings or generate 242.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank vs. Nu Holdings
Performance |
| Timeline |
| Toronto Dominion Bank |
| Nu Holdings |
Toronto Dominion and Nu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Nu Holdings
The main advantage of trading using opposite Toronto Dominion and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Nu Holdings 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 Nu Holdings will offset losses from the drop in Nu Holdings' long position.| Toronto Dominion vs. Bank of Montreal | Toronto Dominion vs. Canadian Imperial Bank | Toronto Dominion vs. Bank of Nova | Toronto Dominion vs. JPMorgan Chase Co |
| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion 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 CEOs Directory module to screen CEOs from public companies around the world.
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