Correlation Between TD Equity and TD International
Can any of the company-specific risk be diversified away by investing in both TD Equity and TD International 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 TD Equity and TD International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Equity CAD and TD International Equity, you can compare the effects of market volatilities on TD Equity and TD International 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 TD Equity with a short position of TD International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Equity and TD International.
Diversification Opportunities for TD Equity and TD International
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THU and THE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TD Equity CAD and TD International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD International Equity and TD Equity 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 TD Equity CAD are associated (or correlated) with TD International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD International Equity has no effect on the direction of TD Equity i.e., TD Equity and TD International go up and down completely randomly.
Pair Corralation between TD Equity and TD International
Assuming the 90 days trading horizon TD Equity is expected to generate 1.89 times less return on investment than TD International. In addition to that, TD Equity is 1.4 times more volatile than TD International Equity. It trades about 0.08 of its total potential returns per unit of risk. TD International Equity is currently generating about 0.2 per unit of volatility. If you would invest 2,550 in TD International Equity on October 30, 2024 and sell it today you would earn a total of 66.00 from holding TD International Equity or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
TD Equity CAD vs. TD International Equity
Performance |
| Timeline |
| TD Equity CAD |
| TD International Equity |
TD Equity and TD International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Equity and TD International
The main advantage of trading using opposite TD Equity and TD International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Equity position performs unexpectedly, TD International 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 TD International will offset losses from the drop in TD International's long position.| TD Equity vs. TD Equity Index | TD Equity vs. TD Canadian Equity | TD Equity vs. TD International Equity | TD Equity vs. TD International Equity |
| TD International vs. TD International Equity | TD International vs. TD Equity CAD | TD International vs. TD Canadian Equity | TD International vs. TD Canadian Aggregate |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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