Correlation Between IShares Canadian and TD Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and TD Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Government and TD Canadian Aggregate, you can compare the effects of market volatilities on IShares Canadian and TD Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and TD Canadian.
Diversification Opportunities for IShares Canadian and TD Canadian
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and TDB is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Government and TD Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Aggregate 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 Government are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Aggregate has no effect on the direction of IShares Canadian i.e., IShares Canadian and TD Canadian go up and down completely randomly.
Pair Corralation between IShares Canadian and TD Canadian
Assuming the 90 days trading horizon iShares Canadian Government is expected to generate 1.08 times more return on investment than TD Canadian. However, IShares Canadian is 1.08 times more volatile than TD Canadian Aggregate. It trades about 0.16 of its potential returns per unit of risk. TD Canadian Aggregate is currently generating about 0.16 per unit of risk. If you would invest 1,937 in iShares Canadian Government on September 1, 2024 and sell it today you would earn a total of 32.00 from holding iShares Canadian Government or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Government vs. TD Canadian Aggregate
Performance |
| Timeline |
| iShares Canadian Gov |
| TD Canadian Aggregate |
IShares Canadian and TD Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and TD Canadian
The main advantage of trading using opposite IShares Canadian and TD Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, TD Canadian 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 Canadian will offset losses from the drop in TD Canadian's long position.| IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real | IShares Canadian vs. iShares Canadian Value |
| TD Canadian vs. BetaPro Gold Bullion | TD Canadian vs. BetaPro SP TSX | TD Canadian vs. BetaPro SPTSX Capped | TD Canadian vs. Global X Active |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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