Correlation Between Toronto Dominion and Corus Entertainment

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

Diversification Opportunities for Toronto Dominion and Corus Entertainment

-0.07

Correlation Coefficient

Toronto Dominion  Corus Entertainment

Good diversification

The 3 months correlation between Toronto and Corus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Corus Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corus Entertainment 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 Corus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corus Entertainment has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Corus Entertainment go up and down completely randomly.

Pair Corralation between Toronto Dominion and Corus Entertainment

Assuming the 90 days horizon Toronto Dominion Bank is expected to generate 0.21 times more return on investment than Corus Entertainment. However, Toronto Dominion Bank is 4.82 times less risky than Corus Entertainment. It trades about 0.14 of its potential returns per unit of risk. Corus Entertainment is currently generating about -0.03 per unit of risk. If you would invest  7,791  in Toronto Dominion Bank on December 1, 2024 and sell it today you would earn a total of  873.00  from holding Toronto Dominion Bank or generate 11.21% return on investment over 90 days.

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

Toronto Dominion Bank  vs.  Corus Entertainment

Toronto Dominion Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Toronto Dominion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Corus Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corus Entertainment 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Toronto Dominion and Corus Entertainment

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

The idea behind Toronto Dominion Bank and Corus Entertainment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.