Correlation Between RepliCel Life and Toronto Dominion

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

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

Diversification Opportunities for RepliCel Life and Toronto Dominion

0.73

Correlation Coefficient

RepliCel Life  Toronto Dominion

Poor diversification

The 3 months correlation between RepliCel and Toronto is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding RepliCel Life Sciences and Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and RepliCel Life 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 RepliCel Life Sciences 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 Bank has no effect on the direction of RepliCel Life i.e., RepliCel Life and Toronto Dominion go up and down completely randomly.

Pair Corralation between RepliCel Life and Toronto Dominion

Given the investment horizon of 90 days RepliCel Life Sciences is expected to under-perform the Toronto Dominion. In addition to that, RepliCel Life is 15.45 times more volatile than Toronto Dominion Bank. It trades about -0.04 of its total potential returns per unit of risk. Toronto Dominion Bank is currently generating about -0.16 per unit of volatility. If you would invest  8,652  in Toronto Dominion Bank on September 20, 2024 and sell it today you would lose (1,172) from holding Toronto Dominion Bank or give up 13.55% of portfolio value over 90 days.

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

RepliCel Life Sciences  vs.  Toronto Dominion Bank

RepliCel Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RepliCel Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Toronto Dominion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toronto Dominion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with RepliCel Life and Toronto Dominion

The main advantage of trading using opposite RepliCel Life and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RepliCel Life 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 RepliCel Life Sciences and 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.