Correlation Between Toronto Dominion and RTG Mining

Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and RTG 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 RTG 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 RTG Mining, you can compare the effects of market volatilities on Toronto Dominion and RTG 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 RTG Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and RTG Mining.

Diversification Opportunities for Toronto Dominion and RTG Mining

-0.44

Correlation Coefficient

Toronto Dominion  RTG Mining

Very good diversification

The 3 months correlation between Toronto and RTG is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and RTG Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTG 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 RTG Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTG Mining has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and RTG Mining go up and down completely randomly.

Pair Corralation between Toronto Dominion and RTG Mining

Assuming the 90 days trading horizon Toronto Dominion Bank is expected to generate 0.04 times more return on investment than RTG Mining. However, Toronto Dominion Bank is 26.71 times less risky than RTG Mining. It trades about 0.12 of its potential returns per unit of risk. RTG Mining is currently generating about 0.0 per unit of risk. If you would invest  2,359  in Toronto Dominion Bank on September 4, 2024 and sell it today you would earn a total of  66.00  from holding Toronto Dominion Bank or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

Toronto Dominion Bank  vs.  RTG Mining

Toronto Dominion Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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.

RTG Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTG Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, RTG Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Toronto Dominion and RTG Mining

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

The idea behind Toronto Dominion Bank and RTG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.