Correlation Between CI Signature and TD Monthly

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

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

Diversification Opportunities for CI Signature and TD Monthly

0.93

Correlation Coefficient

CI Signature  TD Monthly

Almost no diversification

The 3 months correlation between 0P0001AAKP and 0P00016N5D is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CI Signature Cat and TD Monthly Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Monthly Income and CI Signature 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 CI Signature Cat are associated (or correlated) with TD Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Monthly Income has no effect on the direction of CI Signature i.e., CI Signature and TD Monthly go up and down completely randomly.

Pair Corralation between CI Signature and TD Monthly

Assuming the 90 days trading horizon CI Signature Cat is expected to generate 4.47 times more return on investment than TD Monthly. However, CI Signature is 4.47 times more volatile than TD Monthly Income. It trades about 0.28 of its potential returns per unit of risk. TD Monthly Income is currently generating about 0.17 per unit of risk. If you would invest  3,071  in CI Signature Cat on September 14, 2024 and sell it today you would earn a total of  815.00  from holding CI Signature Cat or generate 26.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.83%
Values	Daily Returns

CI Signature Cat  vs.  TD Monthly Income

CI Signature Cat

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Signature Cat are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, CI Signature sustained solid returns over the last few months and may actually be approaching a breakup point.

TD Monthly Income

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Monthly Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, TD Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CI Signature and TD Monthly

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

The idea behind CI Signature Cat and TD Monthly Income 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 Global Correlations module to find global opportunities by holding instruments from different markets.