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 The 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
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto-Dominion and Banco is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The 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 The 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
Assuming the 90 days horizon Toronto-Dominion is expected to generate 3.76 times less return on investment than Banco Santander. But when comparing it to its historical volatility, The Toronto Dominion Bank is 1.4 times less risky than Banco Santander. It trades about 0.03 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Banco Santander SA on August 31, 2024 and sell it today you would earn a total of 140.00 from holding Banco Santander SA or generate 47.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Toronto Dominion Bank vs. Banco Santander SA
Performance |
| Timeline |
| Toronto Dominion |
| 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. Air Transport Services | Toronto-Dominion vs. Applied Materials | Toronto-Dominion vs. Goodyear Tire Rubber | Toronto-Dominion vs. Vulcan Materials |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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