Correlation Between TD Comfort and Desjardins Melodia

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

By analyzing existing cross correlation between TD Comfort Balanced and Desjardins Melodia Balanced, you can compare the effects of market volatilities on TD Comfort and Desjardins Melodia 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 Comfort with a short position of Desjardins Melodia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Comfort and Desjardins Melodia.

Diversification Opportunities for TD Comfort and Desjardins Melodia

0.67

Correlation Coefficient

TD Comfort  Desjardins Melodia

Poor diversification

The 3 months correlation between 0P0001FAU8 and Desjardins is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TD Comfort Balanced and Desjardins Melodia Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins Melodia and TD Comfort 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 Comfort Balanced are associated (or correlated) with Desjardins Melodia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins Melodia has no effect on the direction of TD Comfort i.e., TD Comfort and Desjardins Melodia go up and down completely randomly.

Pair Corralation between TD Comfort and Desjardins Melodia

Assuming the 90 days trading horizon TD Comfort is expected to generate 1.5 times less return on investment than Desjardins Melodia. But when comparing it to its historical volatility, TD Comfort Balanced is 1.19 times less risky than Desjardins Melodia. It trades about 0.21 of its potential returns per unit of risk. Desjardins Melodia Balanced is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,349  in Desjardins Melodia Balanced on September 3, 2024 and sell it today you would earn a total of  84.00  from holding Desjardins Melodia Balanced or generate 6.23% return on investment over 90 days.

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

TD Comfort Balanced  vs.  Desjardins Melodia Balanced

TD Comfort Balanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Comfort Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable technical and fundamental indicators, TD Comfort is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Desjardins Melodia

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins Melodia Balanced are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Desjardins Melodia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TD Comfort and Desjardins Melodia

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

The idea behind TD Comfort Balanced and Desjardins Melodia Balanced 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.