Correlation Between Toronto Dominion and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toronto Dominion Bank and Barclays PLC ADR, you can compare the effects of market volatilities on Toronto Dominion and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Barclays PLC.
Diversification Opportunities for Toronto Dominion and Barclays PLC
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toronto and Barclays is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR 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 are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Barclays PLC go up and down completely randomly.
Pair Corralation between Toronto Dominion and Barclays PLC
Allowing for the 90-day total investment horizon Toronto Dominion Bank is expected to under-perform the Barclays PLC. But the stock apears to be less risky and, when comparing its historical volatility, Toronto Dominion Bank is 1.32 times less risky than Barclays PLC. The stock trades about -0.15 of its potential returns per unit of risk. The Barclays PLC ADR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 927.00 in Barclays PLC ADR on January 20, 2024 and sell it today you would lose (3.00) from holding Barclays PLC ADR or give up 0.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Toronto Dominion Bank vs. Barclays PLC ADR
Performance |
Timeline |
Toronto Dominion Bank |
Barclays PLC ADR |
Toronto Dominion and Barclays PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Toronto Dominion and Barclays PLC
The main advantage of trading using opposite Toronto Dominion and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.Toronto Dominion vs. Bank of Montreal | Toronto Dominion vs. Canadian Imperial Bank | Toronto Dominion vs. Bank of Nova | Toronto Dominion vs. JPMorgan Chase Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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