Correlation Between Guardian Canadian and TD Equity

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

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

Diversification Opportunities for Guardian Canadian and TD Equity

0.88

Correlation Coefficient

Guardian Canadian  TD Equity

Very poor diversification

The 3 months correlation between Guardian and TPU is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Canadian Focused and TD Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Equity Index and Guardian Canadian 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 Guardian Canadian Focused are associated (or correlated) with TD Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Equity Index has no effect on the direction of Guardian Canadian i.e., Guardian Canadian and TD Equity go up and down completely randomly.

Pair Corralation between Guardian Canadian and TD Equity

Assuming the 90 days trading horizon Guardian Canadian Focused is expected to under-perform the TD Equity. But the etf apears to be less risky and, when comparing its historical volatility, Guardian Canadian Focused is 1.54 times less risky than TD Equity. The etf trades about -0.26 of its potential returns per unit of risk. The TD Equity Index is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,919  in TD Equity Index on October 9, 2024 and sell it today you would lose (63.00) from holding TD Equity Index or give up 1.28% of portfolio value over 90 days.

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

Guardian Canadian Focused  vs.  TD Equity Index

Guardian Canadian Focused

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Canadian Focused are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian Canadian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TD Equity Index

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Equity Index are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TD Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guardian Canadian and TD Equity

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

The idea behind Guardian Canadian Focused and TD Equity Index 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.