Correlation Between Toronto Dominion and CHINA BANK
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and CHINA BANK 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 CHINA BANK 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 CHINA BANK ADR20, you can compare the effects of market volatilities on Toronto Dominion and CHINA BANK 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 CHINA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and CHINA BANK.
Diversification Opportunities for Toronto Dominion and CHINA BANK
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toronto and CHINA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Toronto Dominion Bank and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 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 CHINA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and CHINA BANK go up and down completely randomly.
Pair Corralation between Toronto Dominion and CHINA BANK
Assuming the 90 days horizon Toronto Dominion is expected to generate 27.08 times less return on investment than CHINA BANK. But when comparing it to its historical volatility, The Toronto Dominion Bank is 1.64 times less risky than CHINA BANK. It trades about 0.0 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 921.00 in CHINA BANK ADR20 on August 28, 2024 and sell it today you would earn a total of 469.00 from holding CHINA BANK ADR20 or generate 50.92% 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. CHINA BANK ADR20
Performance |
| Timeline |
| Toronto Dominion |
| CHINA BANK ADR20 |
Toronto Dominion and CHINA BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toronto Dominion and CHINA BANK
The main advantage of trading using opposite Toronto Dominion and CHINA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, CHINA BANK 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 CHINA BANK will offset losses from the drop in CHINA BANK's long position.| Toronto Dominion vs. AGRICULTBK HADR25 YC | Toronto Dominion vs. Superior Plus Corp | Toronto Dominion vs. NMI Holdings | Toronto Dominion vs. Origin Agritech |
| CHINA BANK vs. AGRICULTBK HADR25 YC | CHINA BANK vs. The Toronto Dominion Bank | CHINA BANK vs. Superior Plus Corp | CHINA BANK vs. NMI Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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