Correlation Between TD One and Global X

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

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

Diversification Opportunities for TD One and Global X

0.97

Correlation Coefficient

TD One  Global X

Almost no diversification

The 3 months correlation between TOCM and Global is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding TD One Click Moderate and Global X Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Balanced and TD One 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 One Click Moderate are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Balanced has no effect on the direction of TD One i.e., TD One and Global X go up and down completely randomly.

Pair Corralation between TD One and Global X

Assuming the 90 days trading horizon TD One Click Moderate is expected to generate 0.86 times more return on investment than Global X. However, TD One Click Moderate is 1.16 times less risky than Global X. It trades about 0.26 of its potential returns per unit of risk. Global X Balanced is currently generating about 0.22 per unit of risk. If you would invest  1,801  in TD One Click Moderate on September 2, 2024 and sell it today you would earn a total of  109.00  from holding TD One Click Moderate or generate 6.05% return on investment over 90 days.

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

TD One Click Moderate  vs.  Global X Balanced

TD One Click

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD One Click Moderate are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD One is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Balanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Balanced are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD One and Global X

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

The idea behind TD One Click Moderate and Global X 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.