Correlation Between Toronto Dominion and Thunderbird Entertainment

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

Diversification Opportunities for Toronto Dominion and Thunderbird Entertainment

0.76

Correlation Coefficient

Toronto Dominion  Thunderbird Entertainment

Poor diversification

The 3 months correlation between Toronto and Thunderbird is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Thunderbird Entertainment Grou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunderbird 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 Thunderbird Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunderbird Entertainment has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Thunderbird Entertainment go up and down completely randomly.

Pair Corralation between Toronto Dominion and Thunderbird Entertainment

Assuming the 90 days horizon Toronto Dominion Bank is expected to generate 0.42 times more return on investment than Thunderbird Entertainment. However, Toronto Dominion Bank is 2.35 times less risky than Thunderbird Entertainment. It trades about 0.01 of its potential returns per unit of risk. Thunderbird Entertainment Group is currently generating about -0.04 per unit of risk. If you would invest  7,900  in Toronto Dominion Bank on September 4, 2024 and sell it today you would lose (3.00) from holding Toronto Dominion Bank or give up 0.04% of portfolio value over 90 days.

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

Toronto Dominion Bank  vs.  Thunderbird Entertainment Grou

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 very healthy basic indicators, Toronto Dominion is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Thunderbird Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunderbird Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Toronto Dominion and Thunderbird Entertainment

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

The idea behind Toronto Dominion Bank and Thunderbird Entertainment Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.