Correlation Between TD Index and Global Iman

Can any of the company-specific risk be diversified away by investing in both TD Index and Global Iman 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 Global Iman 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 Global Iman Fund, you can compare the effects of market volatilities on TD Index and Global Iman 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 Global Iman. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Index and Global Iman.

Diversification Opportunities for TD Index and Global Iman

0.86

Correlation Coefficient

TD Index  Global Iman

Very poor diversification

The 3 months correlation between 0P000071W8 and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding TD Index Fund and Global Iman Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Iman Fund 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 Global Iman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Iman Fund has no effect on the direction of TD Index i.e., TD Index and Global Iman go up and down completely randomly.

Pair Corralation between TD Index and Global Iman

Assuming the 90 days trading horizon TD Index Fund is expected to generate 0.89 times more return on investment than Global Iman. However, TD Index Fund is 1.12 times less risky than Global Iman. It trades about 0.31 of its potential returns per unit of risk. Global Iman Fund is currently generating about 0.13 per unit of risk. If you would invest  13,091  in TD Index Fund on September 4, 2024 and sell it today you would earn a total of  1,995  from holding TD Index Fund or generate 15.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

TD Index Fund  vs.  Global Iman Fund

TD Index Fund

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Index Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, TD Index sustained solid returns over the last few months and may actually be approaching a breakup point.

Global Iman Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Iman Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of very inconsistent basic indicators, Global Iman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TD Index and Global Iman

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

The idea behind TD Index Fund and Global Iman Fund 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.