Correlation Between TD Index and CI Synergy

Can any of the company-specific risk be diversified away by investing in both TD Index and CI Synergy 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 Index and CI Synergy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TD Index Fund and CI Synergy American, you can compare the effects of market volatilities on TD Index and CI Synergy 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 Index with a short position of CI Synergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Index and CI Synergy.

Diversification Opportunities for TD Index and CI Synergy

0.97

Correlation Coefficient

TD Index  CI Synergy

Almost no diversification

The 3 months correlation between 0P000071W8 and 0P000075Q1 is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding TD Index Fund and CI Synergy American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Synergy American and TD Index 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 Index Fund are associated (or correlated) with CI Synergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Synergy American has no effect on the direction of TD Index i.e., TD Index and CI Synergy go up and down completely randomly.

Pair Corralation between TD Index and CI Synergy

Assuming the 90 days trading horizon TD Index is expected to generate 1.18 times less return on investment than CI Synergy. But when comparing it to its historical volatility, TD Index Fund is 1.11 times less risky than CI Synergy. It trades about 0.14 of its potential returns per unit of risk. CI Synergy American is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,032  in CI Synergy American on October 11, 2024 and sell it today you would earn a total of  1,197  from holding CI Synergy American or generate 39.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	58.18%
Values	Daily Returns

TD Index Fund  vs.  CI Synergy American

TD Index Fund

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TD Index Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, TD Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CI Synergy American

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Synergy American are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CI Synergy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TD Index and CI Synergy

The main advantage of trading using opposite TD Index and CI Synergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Index position performs unexpectedly, CI Synergy 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 CI Synergy will offset losses from the drop in CI Synergy's long position.

The idea behind TD Index Fund and CI Synergy American pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.