Correlation Between IShares Canadian and TD Long
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and TD Long 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 IShares Canadian and TD Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Universe and TD Long Term, you can compare the effects of market volatilities on IShares Canadian and TD Long 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 IShares Canadian with a short position of TD Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and TD Long.
Diversification Opportunities for IShares Canadian and TD Long
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and TULB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and TD Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Long Term and IShares Canadian 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 iShares Canadian Universe are associated (or correlated) with TD Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Long Term has no effect on the direction of IShares Canadian i.e., IShares Canadian and TD Long go up and down completely randomly.
Pair Corralation between IShares Canadian and TD Long
Assuming the 90 days trading horizon IShares Canadian is expected to generate 3.15 times less return on investment than TD Long. But when comparing it to its historical volatility, iShares Canadian Universe is 2.13 times less risky than TD Long. It trades about 0.1 of its potential returns per unit of risk. TD Long Term is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,324 in TD Long Term on November 27, 2024 and sell it today you would earn a total of 277.00 from holding TD Long Term or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
iShares Canadian Universe vs. TD Long Term
Performance |
| Timeline |
| iShares Canadian Universe |
| TD Long Term |
IShares Canadian and TD Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and TD Long
The main advantage of trading using opposite IShares Canadian and TD Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, TD Long 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 Long will offset losses from the drop in TD Long's long position.| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
| TD Long vs. TD Canadian Long | TD Long vs. TD Active Global | TD Long vs. TD Active High | TD Long vs. TD Active Global |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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