Correlation Between Toronto Dominion and Senvest Capital

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

Diversification Opportunities for Toronto Dominion and Senvest Capital

-0.46

Correlation Coefficient

Toronto Dominion  Senvest Capital

Very good diversification

The 3 months correlation between Toronto and Senvest is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital 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 Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Senvest Capital go up and down completely randomly.

Pair Corralation between Toronto Dominion and Senvest Capital

Assuming the 90 days horizon Toronto Dominion is expected to generate 16.89 times less return on investment than Senvest Capital. But when comparing it to its historical volatility, Toronto Dominion Bank is 1.28 times less risky than Senvest Capital. It trades about 0.01 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  31,000  in Senvest Capital on October 9, 2024 and sell it today you would earn a total of  8,500  from holding Senvest Capital or generate 27.42% return on investment over 90 days.

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

Toronto Dominion Bank  vs.  Senvest Capital

Toronto Dominion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Senvest Capital

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Senvest Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toronto Dominion and Senvest Capital

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

The idea behind Toronto Dominion Bank and Senvest Capital 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.