Correlation Between IShares High and TD Canadian
Can any of the company-specific risk be diversified away by investing in both IShares High 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 High 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 High Quality and TD Canadian Aggregate, you can compare the effects of market volatilities on IShares High 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 High with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares High and TD Canadian.
Diversification Opportunities for IShares High and TD Canadian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and TDB is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares High Quality 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 High 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 High Quality 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 High i.e., IShares High and TD Canadian go up and down completely randomly.
Pair Corralation between IShares High and TD Canadian
Assuming the 90 days trading horizon IShares High is expected to generate 1.0 times less return on investment than TD Canadian. But when comparing it to its historical volatility, iShares High Quality is 1.05 times less risky than TD Canadian. It trades about 0.16 of its potential returns per unit of risk. TD Canadian Aggregate is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,303 in TD Canadian Aggregate on September 1, 2024 and sell it today you would earn a total of 20.00 from holding TD Canadian Aggregate or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares High Quality vs. TD Canadian Aggregate
Performance |
| Timeline |
| iShares High Quality |
| TD Canadian Aggregate |
IShares High and TD Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares High and TD Canadian
The main advantage of trading using opposite IShares High and TD Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares High 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 High vs. iShares 1 10Yr Laddered | IShares High vs. iShares Floating Rate | IShares High vs. iShares IG Corporate | IShares High vs. Global X Active |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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