Correlation Between Toronto Dominion and Medicenna Therapeutics

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

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

Diversification Opportunities for Toronto Dominion and Medicenna Therapeutics

-0.39

Correlation Coefficient

Toronto Dominion  Medicenna Therapeutics

Very good diversification

The 3 months correlation between Toronto and Medicenna is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and Medicenna Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicenna Therapeutics and Toronto Dominion 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 Toronto Dominion Bank Pref are associated (or correlated) with Medicenna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicenna Therapeutics has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Medicenna Therapeutics go up and down completely randomly.

Pair Corralation between Toronto Dominion and Medicenna Therapeutics

Assuming the 90 days trading horizon Toronto Dominion is expected to generate 13.94 times less return on investment than Medicenna Therapeutics. But when comparing it to its historical volatility, Toronto Dominion Bank Pref is 11.82 times less risky than Medicenna Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Medicenna Therapeutics Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Medicenna Therapeutics Corp on September 12, 2024 and sell it today you would earn a total of  133.00  from holding Medicenna Therapeutics Corp or generate 241.82% return on investment over 90 days.

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

Toronto Dominion Bank Pref  vs.  Medicenna Therapeutics Corp

Toronto Dominion Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank Pref are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Toronto Dominion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Medicenna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicenna Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Medicenna Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Toronto Dominion and Medicenna Therapeutics

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

The idea behind Toronto Dominion Bank Pref and Medicenna Therapeutics Corp 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.