Correlation Between TD Active and Global X
Can any of the company-specific risk be diversified away by investing in both TD Active and Global X 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 Active and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Active Enhanced and Global X Equal, you can compare the effects of market volatilities on TD Active and Global X 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 Active with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Active and Global X.
Diversification Opportunities for TD Active and Global X
Pay attention - limited upside
The 3 months correlation between TUED and Global is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding TD Active Enhanced and Global X Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Equal and TD Active 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 Active Enhanced are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Equal has no effect on the direction of TD Active i.e., TD Active and Global X go up and down completely randomly.
Pair Corralation between TD Active and Global X
Assuming the 90 days trading horizon TD Active Enhanced is expected to generate 1.05 times more return on investment than Global X. However, TD Active is 1.05 times more volatile than Global X Equal. It trades about 0.18 of its potential returns per unit of risk. Global X Equal is currently generating about 0.02 per unit of risk. If you would invest 2,094 in TD Active Enhanced on September 25, 2024 and sell it today you would earn a total of 1,057 from holding TD Active Enhanced or generate 50.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.6% |
Values | Daily Returns |
TD Active Enhanced vs. Global X Equal
Performance |
Timeline |
TD Active Enhanced |
Global X Equal |
TD Active and Global X Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TD Active and Global X
The main advantage of trading using opposite TD Active and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Active position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.TD Active vs. Vanguard SP 500 | TD Active vs. Vanguard FTSE Canadian | TD Active vs. iShares NASDAQ 100 | TD Active vs. Vanguard Total Market |
Global X vs. iShares Global Infrastructure | Global X vs. iShares Global Monthly | Global X vs. iShares 1 5 Year | Global X vs. iShares Equal Weight |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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