Correlation Between Toronto Dominion and OrganiGram Holdings

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

By analyzing existing cross correlation between Toronto Dominion Bank Pref and OrganiGram Holdings, you can compare the effects of market volatilities on Toronto Dominion and OrganiGram Holdings 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 OrganiGram Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and OrganiGram Holdings.

Diversification Opportunities for Toronto Dominion and OrganiGram Holdings

-0.38

Correlation Coefficient

Toronto Dominion  OrganiGram Holdings

Very good diversification

The 3 months correlation between Toronto and OrganiGram is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings 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 Pref are associated (or correlated) with OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between Toronto Dominion and OrganiGram Holdings

Assuming the 90 days trading horizon Toronto Dominion is expected to generate 2.83 times less return on investment than OrganiGram Holdings. But when comparing it to its historical volatility, Toronto Dominion Bank Pref is 9.96 times less risky than OrganiGram Holdings. It trades about 0.05 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  225.00  in OrganiGram Holdings on October 22, 2024 and sell it today you would lose (3.00) from holding OrganiGram Holdings or give up 1.33% of portfolio value over 90 days.

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

Toronto Dominion Bank Pref  vs.  OrganiGram Holdings

Toronto Dominion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toronto Dominion Bank Pref 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 current stock price disturbance, may contribute to short-term losses for the investors.

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Toronto Dominion and OrganiGram Holdings

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

The idea behind Toronto Dominion Bank Pref and OrganiGram Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.