Correlation Between E Split and Toronto Dominion

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

By analyzing existing cross correlation between E Split Corp and Toronto Dominion Bank Pref, you can compare the effects of market volatilities on E Split and Toronto Dominion 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 E Split with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Toronto Dominion.

Diversification Opportunities for E Split and Toronto Dominion

0.83

Correlation Coefficient

E Split  Toronto Dominion

Very poor diversification

The 3 months correlation between ENS and Toronto is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Toronto Dominion Bank Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and E Split 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 E Split Corp are associated (or correlated) with Toronto Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion Bank has no effect on the direction of E Split i.e., E Split and Toronto Dominion go up and down completely randomly.

Pair Corralation between E Split and Toronto Dominion

Assuming the 90 days trading horizon E Split is expected to generate 1.17 times less return on investment than Toronto Dominion. In addition to that, E Split is 1.84 times more volatile than Toronto Dominion Bank Pref. It trades about 0.03 of its total potential returns per unit of risk. Toronto Dominion Bank Pref is currently generating about 0.06 per unit of volatility. If you would invest  2,199  in Toronto Dominion Bank Pref on September 2, 2024 and sell it today you would earn a total of  384.00  from holding Toronto Dominion Bank Pref or generate 17.46% return on investment over 90 days.

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

E Split Corp  vs.  Toronto Dominion Bank Pref

E Split Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, E Split may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Toronto Dominion Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank Pref are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Toronto Dominion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with E Split and Toronto Dominion

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

The idea behind E Split Corp and Toronto Dominion Bank Pref 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 Transaction History module to view history of all your transactions and understand their impact on performance.