Correlation Between TD Comfort and CI Gold

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

By analyzing existing cross correlation between TD Comfort Balanced and CI Gold Bullion, you can compare the effects of market volatilities on TD Comfort and CI Gold 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 CI Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Comfort and CI Gold.

Diversification Opportunities for TD Comfort and CI Gold

0.39

Correlation Coefficient

TD Comfort  CI Gold

Weak diversification

The 3 months correlation between 0P0001FAU8 and VALT-B is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TD Comfort Balanced and CI Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Bullion 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 Balanced are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Bullion has no effect on the direction of TD Comfort i.e., TD Comfort and CI Gold go up and down completely randomly.

Pair Corralation between TD Comfort and CI Gold

Assuming the 90 days trading horizon TD Comfort is expected to generate 2.54 times less return on investment than CI Gold. But when comparing it to its historical volatility, TD Comfort Balanced is 2.27 times less risky than CI Gold. It trades about 0.09 of its potential returns per unit of risk. CI Gold Bullion is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,447  in CI Gold Bullion on September 19, 2024 and sell it today you would earn a total of  1,274  from holding CI Gold Bullion or generate 52.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

TD Comfort Balanced  vs.  CI Gold Bullion

TD Comfort Balanced

Risk-Adjusted Performance

5 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Comfort Balanced are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable technical and fundamental indicators, TD Comfort is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CI Gold Bullion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Bullion are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, CI Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TD Comfort and CI Gold

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

The idea behind TD Comfort Balanced and CI Gold Bullion 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.