Correlation Between TD Comfort and Global Healthcare

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

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

Diversification Opportunities for TD Comfort and Global Healthcare

-0.78

Correlation Coefficient

TD Comfort  Global Healthcare

Pay attention - limited upside

The 3 months correlation between 0P0001FAU5 and Global is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding TD Comfort Aggressive and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income and TD Comfort 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 Comfort Aggressive are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of TD Comfort i.e., TD Comfort and Global Healthcare go up and down completely randomly.

Pair Corralation between TD Comfort and Global Healthcare

Assuming the 90 days trading horizon TD Comfort Aggressive is expected to generate 0.45 times more return on investment than Global Healthcare. However, TD Comfort Aggressive is 2.21 times less risky than Global Healthcare. It trades about 0.25 of its potential returns per unit of risk. Global Healthcare Income is currently generating about -0.08 per unit of risk. If you would invest  1,631  in TD Comfort Aggressive on September 4, 2024 and sell it today you would earn a total of  133.00  from holding TD Comfort Aggressive or generate 8.15% return on investment over 90 days.

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

TD Comfort Aggressive  vs.  Global Healthcare Income

TD Comfort Aggressive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Comfort Aggressive are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, TD Comfort may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Global Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD Comfort and Global Healthcare

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

The idea behind TD Comfort Aggressive and Global Healthcare 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.