Correlation Between VULCAN MATERIALS and Toronto-Dominion

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

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

Diversification Opportunities for VULCAN MATERIALS and Toronto-Dominion

-0.49

Correlation Coefficient

VULCAN MATERIALS  Toronto-Dominion

Very good diversification

The 3 months correlation between VULCAN and Toronto-Dominion is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and The Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion and VULCAN MATERIALS 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 VULCAN MATERIALS are associated (or correlated) with Toronto-Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Toronto-Dominion go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Toronto-Dominion

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 1.62 times more return on investment than Toronto-Dominion. However, VULCAN MATERIALS is 1.62 times more volatile than The Toronto Dominion Bank. It trades about 0.23 of its potential returns per unit of risk. The Toronto Dominion Bank is currently generating about 0.04 per unit of risk. If you would invest  20,961  in VULCAN MATERIALS on September 4, 2024 and sell it today you would earn a total of  6,239  from holding VULCAN MATERIALS or generate 29.76% return on investment over 90 days.

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

VULCAN MATERIALS  vs.  The Toronto Dominion Bank

VULCAN MATERIALS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VULCAN MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Toronto Dominion

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Toronto Dominion Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with VULCAN MATERIALS and Toronto-Dominion

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

The idea behind VULCAN MATERIALS and The Toronto Dominion Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.