Correlation Between TD Canadian and Sprott Physical

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

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

Diversification Opportunities for TD Canadian and Sprott Physical

-0.62

Correlation Coefficient

TD Canadian  Sprott Physical

Excellent diversification

The 3 months correlation between TCLB and Sprott is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium and TD 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 TD Canadian Long are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of TD Canadian i.e., TD Canadian and Sprott Physical go up and down completely randomly.

Pair Corralation between TD Canadian and Sprott Physical

Assuming the 90 days trading horizon TD Canadian Long is expected to generate 0.31 times more return on investment than Sprott Physical. However, TD Canadian Long is 3.24 times less risky than Sprott Physical. It trades about 0.05 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about -0.09 per unit of risk. If you would invest  11,844  in TD Canadian Long on December 30, 2024 and sell it today you would earn a total of  277.00  from holding TD Canadian Long or generate 2.34% return on investment over 90 days.

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

TD Canadian Long  vs.  Sprott Physical Uranium

TD Canadian Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Long are ranked lower than 4 (%) 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.

Sprott Physical Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Physical Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with TD Canadian and Sprott Physical

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

The idea behind TD Canadian Long and Sprott Physical Uranium 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.