Correlation Between IShares Core and TD Select
Can any of the company-specific risk be diversified away by investing in both IShares Core and TD Select 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 Core and TD Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and TD Select Short, you can compare the effects of market volatilities on IShares Core and TD Select 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 Core with a short position of TD Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and TD Select.
Diversification Opportunities for IShares Core and TD Select
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and TCSB is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and TD Select Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Select Short and IShares Core 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 Core Canadian are associated (or correlated) with TD Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Select Short has no effect on the direction of IShares Core i.e., IShares Core and TD Select go up and down completely randomly.
Pair Corralation between IShares Core and TD Select
Assuming the 90 days trading horizon iShares Core Canadian is expected to generate 4.32 times more return on investment than TD Select. However, IShares Core is 4.32 times more volatile than TD Select Short. It trades about 0.08 of its potential returns per unit of risk. TD Select Short is currently generating about 0.2 per unit of risk. If you would invest 1,950 in iShares Core Canadian on September 15, 2024 and sell it today you would earn a total of 28.00 from holding iShares Core Canadian or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Canadian vs. TD Select Short
Performance |
| Timeline |
| iShares Core Canadian |
| TD Select Short |
IShares Core and TD Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and TD Select
The main advantage of trading using opposite IShares Core and TD Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, TD Select 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 Select will offset losses from the drop in TD Select's long position.| IShares Core vs. iShares Canadian Government | IShares Core vs. iShares Core Canadian | IShares Core vs. iShares Canadian Short | IShares Core vs. iShares Canadian Real |
| TD Select vs. iShares Canadian Universe | TD Select vs. iShares Canadian Real | TD Select vs. iShares Core Canadian | TD Select vs. iShares Core Canadian |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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