Correlation Between IShares ESG and TD One

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

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

Diversification Opportunities for IShares ESG and TD One

0.82

Correlation Coefficient

IShares ESG  TD One

Very poor diversification

The 3 months correlation between IShares and TOCC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and TD One Click Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD One Click and IShares ESG 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 iShares ESG Advanced are associated (or correlated) with TD One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD One Click has no effect on the direction of IShares ESG i.e., IShares ESG and TD One go up and down completely randomly.

Pair Corralation between IShares ESG and TD One

Assuming the 90 days trading horizon iShares ESG Advanced is expected to generate 1.79 times more return on investment than TD One. However, IShares ESG is 1.79 times more volatile than TD One Click Conservative. It trades about 0.28 of its potential returns per unit of risk. TD One Click Conservative is currently generating about 0.12 per unit of risk. If you would invest  7,016  in iShares ESG Advanced on September 17, 2024 and sell it today you would earn a total of  713.00  from holding iShares ESG Advanced or generate 10.16% return on investment over 90 days.

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

iShares ESG Advanced  vs.  TD One Click Conservative

iShares ESG Advanced

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Advanced are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TD One Click

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TD One Click Conservative are ranked lower than 9 (%) 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.

Pair Trading with IShares ESG and TD One

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

The idea behind iShares ESG Advanced and TD One Click Conservative 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.