Correlation Between Algorand and TD Active

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

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

Diversification Opportunities for Algorand and TD Active

0.81

Correlation Coefficient

Algorand  TD Active

Very poor diversification

The 3 months correlation between Algorand and TGGR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and TD Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Global and Algorand 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 Algorand are associated (or correlated) with TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Global has no effect on the direction of Algorand i.e., Algorand and TD Active go up and down completely randomly.

Pair Corralation between Algorand and TD Active

Assuming the 90 days trading horizon Algorand is expected to under-perform the TD Active. In addition to that, Algorand is 11.07 times more volatile than TD Active Global. It trades about -0.05 of its total potential returns per unit of risk. TD Active Global is currently generating about -0.13 per unit of volatility. If you would invest  2,905  in TD Active Global on October 10, 2024 and sell it today you would lose (58.00) from holding TD Active Global or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.91%
Values	Daily Returns

Algorand  vs.  TD Active Global

Algorand

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

TD Active Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TD Active Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Algorand and TD Active

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

The idea behind Algorand and TD Active Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.