Correlation Between TD Equity and Guardian International

Can any of the company-specific risk be diversified away by investing in both TD Equity and Guardian International 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 TD Equity and Guardian International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TD Equity Index and Guardian International Equity, you can compare the effects of market volatilities on TD Equity and Guardian International 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 TD Equity with a short position of Guardian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Equity and Guardian International.

Diversification Opportunities for TD Equity and Guardian International

-0.79

Correlation Coefficient

TD Equity  Guardian International

Pay attention - limited upside

The 3 months correlation between TPU and Guardian is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding TD Equity Index and Guardian International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian International and TD Equity 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 TD Equity Index are associated (or correlated) with Guardian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian International has no effect on the direction of TD Equity i.e., TD Equity and Guardian International go up and down completely randomly.

Pair Corralation between TD Equity and Guardian International

Assuming the 90 days trading horizon TD Equity Index is expected to under-perform the Guardian International. In addition to that, TD Equity is 4.14 times more volatile than Guardian International Equity. It trades about -0.07 of its total potential returns per unit of risk. Guardian International Equity is currently generating about -0.08 per unit of volatility. If you would invest  2,206  in Guardian International Equity on October 9, 2024 and sell it today you would lose (7.00) from holding Guardian International Equity or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

TD Equity Index  vs.  Guardian International Equity

TD Equity Index

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Equity Index are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TD Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guardian International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Guardian International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD Equity and Guardian International

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

The idea behind TD Equity Index and Guardian International Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.