Correlation Between IShares Core and TD Global

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

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

Diversification Opportunities for IShares Core and TD Global

0.98

Correlation Coefficient

IShares Core  TD Global

Almost no diversification

The 3 months correlation between IShares and TEC is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Equity and TD Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Global Technology and IShares Core 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 Core Equity are associated (or correlated) with TD Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Global Technology has no effect on the direction of IShares Core i.e., IShares Core and TD Global go up and down completely randomly.

Pair Corralation between IShares Core and TD Global

Assuming the 90 days trading horizon IShares Core is expected to generate 1.66 times less return on investment than TD Global. But when comparing it to its historical volatility, iShares Core Equity is 1.88 times less risky than TD Global. It trades about 0.28 of its potential returns per unit of risk. TD Global Technology is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,779  in TD Global Technology on September 2, 2024 and sell it today you would earn a total of  647.00  from holding TD Global Technology or generate 17.12% return on investment over 90 days.

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

iShares Core Equity  vs.  TD Global Technology

iShares Core Equity

Risk-Adjusted Performance

21 of 100

Solid

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

TD Global Technology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Global Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, TD Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and TD Global

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

The idea behind iShares Core Equity and TD Global Technology 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.

Check out your portfolio center.

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.