Correlation Between TD Equity and BetaPro NASDAQ

Can any of the company-specific risk be diversified away by investing in both TD Equity and BetaPro NASDAQ 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 BetaPro NASDAQ 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 BetaPro NASDAQ 100 2x, you can compare the effects of market volatilities on TD Equity and BetaPro NASDAQ 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 BetaPro NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Equity and BetaPro NASDAQ.

Diversification Opportunities for TD Equity and BetaPro NASDAQ

-0.88

Correlation Coefficient

TD Equity  BetaPro NASDAQ

Pay attention - limited upside

The 3 months correlation between TPU and BetaPro is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding TD Equity Index and BetaPro NASDAQ 100 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro NASDAQ 100 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 BetaPro NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro NASDAQ 100 has no effect on the direction of TD Equity i.e., TD Equity and BetaPro NASDAQ go up and down completely randomly.

Pair Corralation between TD Equity and BetaPro NASDAQ

Assuming the 90 days trading horizon TD Equity Index is expected to generate 0.33 times more return on investment than BetaPro NASDAQ. However, TD Equity Index is 3.07 times less risky than BetaPro NASDAQ. It trades about 0.15 of its potential returns per unit of risk. BetaPro NASDAQ 100 2x is currently generating about -0.07 per unit of risk. If you would invest  3,210  in TD Equity Index on October 24, 2024 and sell it today you would earn a total of  1,761  from holding TD Equity Index or generate 54.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.76%
Values	Daily Returns

TD Equity Index  vs.  BetaPro NASDAQ 100 2x

TD Equity Index

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TD Equity Index are ranked lower than 10 (%) 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.

BetaPro NASDAQ 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro NASDAQ 100 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with TD Equity and BetaPro NASDAQ

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

The idea behind TD Equity Index and BetaPro NASDAQ 100 2x 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.