Correlation Between Toronto Dominion and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and SLM 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 SLM 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 SLM Corp, you can compare the effects of market volatilities on Toronto Dominion and SLM 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and SLM Corp.
Diversification Opportunities for Toronto Dominion and SLM Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and SLM is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and SLM Corp go up and down completely randomly.
Pair Corralation between Toronto Dominion and SLM Corp
Allowing for the 90-day total investment horizon Toronto Dominion Bank is expected to under-perform the SLM Corp. But the stock apears to be less risky and, when comparing its historical volatility, Toronto Dominion Bank is 1.92 times less risky than SLM Corp. The stock trades about -0.05 of its potential returns per unit of risk. The SLM Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,140 in SLM Corp on August 24, 2024 and sell it today you would earn a total of 346.00 from holding SLM Corp or generate 16.17% 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. SLM Corp
Performance |
| Timeline |
| Toronto Dominion Bank |
| SLM Corp |
Toronto Dominion and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and SLM Corp
The main advantage of trading using opposite Toronto Dominion and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, SLM 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 SLM Corp will offset losses from the drop in SLM Corp's 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 |
| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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