Correlation Between Toronto Dominion and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Banco Santander 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 Banco Santander 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 Banco Santander SA, you can compare the effects of market volatilities on Toronto Dominion and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Banco Santander.
Diversification Opportunities for Toronto Dominion and Banco Santander
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Toronto and Banco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Banco Santander go up and down completely randomly.
Pair Corralation between Toronto Dominion and Banco Santander
Allowing for the 90-day total investment horizon Toronto Dominion Bank is expected to generate 0.39 times more return on investment than Banco Santander. However, Toronto Dominion Bank is 2.58 times less risky than Banco Santander. It trades about 0.14 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.16 per unit of risk. If you would invest 5,503 in Toronto Dominion Bank on September 4, 2024 and sell it today you would earn a total of 117.00 from holding Toronto Dominion Bank or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toronto Dominion Bank vs. Banco Santander SA
Performance |
| Timeline |
| Toronto Dominion Bank |
| Banco Santander SA |
Toronto Dominion and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and Banco Santander
The main advantage of trading using opposite Toronto Dominion and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Toronto Dominion vs. Citigroup | Toronto Dominion vs. Aquagold International | Toronto Dominion vs. Thrivent High Yield | Toronto Dominion vs. Morningstar Unconstrained Allocation |
| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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