Correlation Between TD Index and PHN Multi

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

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

Diversification Opportunities for TD Index and PHN Multi

0.98

Correlation Coefficient

TD Index  PHN Multi

Almost no diversification

The 3 months correlation between 0P000071W8 and PHN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding TD Index Fund and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and TD Index 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 Index Fund are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of TD Index i.e., TD Index and PHN Multi go up and down completely randomly.

Pair Corralation between TD Index and PHN Multi

Assuming the 90 days trading horizon TD Index Fund is expected to generate 1.05 times more return on investment than PHN Multi. However, TD Index is 1.05 times more volatile than PHN Multi Style All Cap. It trades about 0.28 of its potential returns per unit of risk. PHN Multi Style All Cap is currently generating about 0.24 per unit of risk. If you would invest  13,150  in TD Index Fund on September 2, 2024 and sell it today you would earn a total of  1,816  from holding TD Index Fund or generate 13.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

TD Index Fund  vs.  PHN Multi Style All Cap

TD Index Fund

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Index Fund are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, TD Index sustained solid returns over the last few months and may actually be approaching a breakup point.

PHN Multi Style

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TD Index and PHN Multi

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

The idea behind TD Index Fund and PHN Multi Style All Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..