Correlation Between Toronto-Dominion and THRACE PLASTICS

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

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

Diversification Opportunities for Toronto-Dominion and THRACE PLASTICS

-0.16

Correlation Coefficient

Toronto-Dominion  THRACE PLASTICS

Good diversification

The 3 months correlation between Toronto-Dominion and THRACE is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Toronto Dominion Bank and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 The Toronto Dominion Bank are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Toronto-Dominion i.e., Toronto-Dominion and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between Toronto-Dominion and THRACE PLASTICS

Assuming the 90 days horizon Toronto-Dominion is expected to generate 12.94 times less return on investment than THRACE PLASTICS. But when comparing it to its historical volatility, The Toronto Dominion Bank is 1.22 times less risky than THRACE PLASTICS. It trades about 0.0 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  378.00  in THRACE PLASTICS on October 10, 2024 and sell it today you would earn a total of  22.00  from holding THRACE PLASTICS or generate 5.82% return on investment over 90 days.

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

The Toronto Dominion Bank  vs.  THRACE PLASTICS

Toronto Dominion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Toronto Dominion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Toronto-Dominion is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

THRACE PLASTICS

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Toronto-Dominion and THRACE PLASTICS

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

The idea behind The Toronto Dominion Bank and THRACE PLASTICS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.