Correlation Between JFT Strategies and TD Index

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

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

Diversification Opportunities for JFT Strategies and TD Index

-0.11

Correlation Coefficient

JFT Strategies  TD Index

Good diversification

The 3 months correlation between JFT and 0P000071W8 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding JFT Strategies and TD Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Index Fund and JFT Strategies 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 JFT Strategies are associated (or correlated) with TD Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Index Fund has no effect on the direction of JFT Strategies i.e., JFT Strategies and TD Index go up and down completely randomly.

Pair Corralation between JFT Strategies and TD Index

Assuming the 90 days trading horizon JFT Strategies is expected to under-perform the TD Index. But the fund apears to be less risky and, when comparing its historical volatility, JFT Strategies is 1.0 times less risky than TD Index. The fund trades about -0.03 of its potential returns per unit of risk. The TD Index Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14,240  in TD Index Fund on October 26, 2024 and sell it today you would earn a total of  1,158  from holding TD Index Fund or generate 8.13% return on investment over 90 days.

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

JFT Strategies  vs.  TD Index Fund

JFT Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JFT Strategies has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, JFT Strategies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TD Index Fund

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with JFT Strategies and TD Index

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

The idea behind JFT Strategies and TD Index Fund 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.