Correlation Between CIBC Equity and TD One

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

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

Diversification Opportunities for CIBC Equity and TD One

0.91

Correlation Coefficient

CIBC Equity  TD One

Almost no diversification

The 3 months correlation between CIBC and TOCA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Equity Index and TD One Click Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD One Click and CIBC Equity 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 CIBC Equity Index are associated (or correlated) with TD One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD One Click has no effect on the direction of CIBC Equity i.e., CIBC Equity and TD One go up and down completely randomly.

Pair Corralation between CIBC Equity and TD One

Assuming the 90 days trading horizon CIBC Equity is expected to generate 1.04 times less return on investment than TD One. In addition to that, CIBC Equity is 1.71 times more volatile than TD One Click Aggressive. It trades about 0.09 of its total potential returns per unit of risk. TD One Click Aggressive is currently generating about 0.16 per unit of volatility. If you would invest  2,319  in TD One Click Aggressive on October 26, 2024 and sell it today you would earn a total of  46.00  from holding TD One Click Aggressive or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

CIBC Equity Index  vs.  TD One Click Aggressive

CIBC Equity Index

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Equity Index are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, CIBC Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TD One Click

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD One Click Aggressive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD One is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CIBC Equity and TD One

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

The idea behind CIBC Equity Index and TD One Click Aggressive 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.