Correlation Between BetaPro NASDAQ and TD Canadian

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

By analyzing existing cross correlation between BetaPro NASDAQ 100 2x and TD Canadian Long, you can compare the effects of market volatilities on BetaPro NASDAQ and TD Canadian 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 BetaPro NASDAQ with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and TD Canadian.

Diversification Opportunities for BetaPro NASDAQ and TD Canadian

0.26

Correlation Coefficient

BetaPro NASDAQ  TD Canadian

Modest diversification

The 3 months correlation between BetaPro and TCLB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and TD Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Long and BetaPro NASDAQ 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 BetaPro NASDAQ 100 2x are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Long has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and TD Canadian go up and down completely randomly.

Pair Corralation between BetaPro NASDAQ and TD Canadian

Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 3.57 times more return on investment than TD Canadian. However, BetaPro NASDAQ is 3.57 times more volatile than TD Canadian Long. It trades about 0.11 of its potential returns per unit of risk. TD Canadian Long is currently generating about 0.06 per unit of risk. If you would invest  999.00  in BetaPro NASDAQ 100 2x on December 21, 2024 and sell it today you would earn a total of  173.00  from holding BetaPro NASDAQ 100 2x or generate 17.32% return on investment over 90 days.

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

BetaPro NASDAQ 100 2x  vs.  TD Canadian Long

BetaPro NASDAQ 100

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro NASDAQ 100 2x are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BetaPro NASDAQ displayed solid returns over the last few months and may actually be approaching a breakup point.

TD Canadian Long

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Long are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BetaPro NASDAQ and TD Canadian

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

The idea behind BetaPro NASDAQ 100 2x and TD Canadian Long 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.