Correlation Between TD Dividend and CI Global

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

By analyzing existing cross correlation between TD Dividend Growth and CI Global Alpha, you can compare the effects of market volatilities on TD Dividend and CI Global 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 Dividend with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Dividend and CI Global.

Diversification Opportunities for TD Dividend and CI Global

0.74

Correlation Coefficient

TD Dividend  CI Global

Poor diversification

The 3 months correlation between 0P00016N6E and CIG18006 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TD Dividend Growth and CI Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Alpha and TD Dividend 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 Dividend Growth are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Alpha has no effect on the direction of TD Dividend i.e., TD Dividend and CI Global go up and down completely randomly.

Pair Corralation between TD Dividend and CI Global

Assuming the 90 days trading horizon TD Dividend is expected to generate 2.37 times less return on investment than CI Global. But when comparing it to its historical volatility, TD Dividend Growth is 2.54 times less risky than CI Global. It trades about 0.29 of its potential returns per unit of risk. CI Global Alpha is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  8,375  in CI Global Alpha on September 4, 2024 and sell it today you would earn a total of  2,005  from holding CI Global Alpha or generate 23.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

TD Dividend Growth  vs.  CI Global Alpha

TD Dividend Growth

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Dividend Growth are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, TD Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Global Alpha

Risk-Adjusted Performance

21 of 100

Solid

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

Pair Trading with TD Dividend and CI Global

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

The idea behind TD Dividend Growth and CI Global Alpha 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.