Correlation Between TD Equity and CIBC International
Can any of the company-specific risk be diversified away by investing in both TD Equity and CIBC 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 CIBC International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Equity Index and CIBC International Equity, you can compare the effects of market volatilities on TD Equity and CIBC 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 CIBC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Equity and CIBC International.
Diversification Opportunities for TD Equity and CIBC International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TPU and CIBC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding TD Equity Index and CIBC International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC 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 Index are associated (or correlated) with CIBC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC International Equity has no effect on the direction of TD Equity i.e., TD Equity and CIBC International go up and down completely randomly.
Pair Corralation between TD Equity and CIBC International
Assuming the 90 days trading horizon TD Equity Index is expected to generate 1.67 times more return on investment than CIBC International. However, TD Equity is 1.67 times more volatile than CIBC International Equity. It trades about -0.07 of its potential returns per unit of risk. CIBC International Equity is currently generating about -0.34 per unit of risk. If you would invest 4,919 in TD Equity Index on October 9, 2024 and sell it today you would lose (63.00) from holding TD Equity Index or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TD Equity Index vs. CIBC International Equity
Performance |
| Timeline |
| TD Equity Index |
| CIBC International Equity |
TD Equity and CIBC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Equity and CIBC International
The main advantage of trading using opposite TD Equity and CIBC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Equity position performs unexpectedly, CIBC 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 CIBC International will offset losses from the drop in CIBC International's long position.| TD Equity vs. TD Canadian Equity | TD Equity vs. TD International Equity | TD Equity vs. TD Equity CAD | TD Equity vs. TD Canadian Aggregate |
| CIBC International vs. CIBC Global Growth | CIBC International vs. CIBC Flexible Yield | CIBC International vs. CIBC Active Investment | CIBC International vs. CIBC Conservative Fixed |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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