Correlation Between Thrivent High and Toronto Dominion

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

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

Diversification Opportunities for Thrivent High and Toronto Dominion

0.84

Correlation Coefficient

Thrivent High  Toronto Dominion

Very poor diversification

The 3 months correlation between Thrivent and Toronto is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and Thrivent High 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 Thrivent High Yield 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 Thrivent High i.e., Thrivent High and Toronto Dominion go up and down completely randomly.

Pair Corralation between Thrivent High and Toronto Dominion

Assuming the 90 days horizon Thrivent High is expected to generate 12.79 times less return on investment than Toronto Dominion. But when comparing it to its historical volatility, Thrivent High Yield is 4.67 times less risky than Toronto Dominion. It trades about 0.09 of its potential returns per unit of risk. Toronto Dominion Bank is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,237  in Toronto Dominion Bank on December 29, 2024 and sell it today you would earn a total of  859.00  from holding Toronto Dominion Bank or generate 16.4% return on investment over 90 days.

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

Thrivent High Yield  vs.  Toronto Dominion Bank

Thrivent High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Toronto Dominion Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Toronto Dominion exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Toronto Dominion

The main advantage of trading using opposite Thrivent High and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High 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 Thrivent High Yield and Toronto Dominion Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .