Correlation Between Toronto Dominion and Jaguar Mining

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

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

Diversification Opportunities for Toronto Dominion and Jaguar Mining

0.35

Correlation Coefficient

Toronto Dominion  Jaguar Mining

Weak diversification

The 3 months correlation between Toronto and Jaguar is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Jaguar Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Mining and Toronto Dominion 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 Toronto Dominion Bank are associated (or correlated) with Jaguar Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Mining has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Jaguar Mining go up and down completely randomly.

Pair Corralation between Toronto Dominion and Jaguar Mining

Assuming the 90 days trading horizon Toronto Dominion is expected to generate 183.52 times less return on investment than Jaguar Mining. But when comparing it to its historical volatility, Toronto Dominion Bank is 13.99 times less risky than Jaguar Mining. It trades about 0.01 of its potential returns per unit of risk. Jaguar Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Jaguar Mining on December 24, 2024 and sell it today you would earn a total of  75.00  from holding Jaguar Mining or generate 34.09% return on investment over 90 days.

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

Toronto Dominion Bank  vs.  Jaguar Mining

Toronto Dominion Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toronto Dominion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Toronto Dominion is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Jaguar Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaguar Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Jaguar Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toronto Dominion and Jaguar Mining

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

The idea behind Toronto Dominion Bank and Jaguar Mining 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.