Correlation Between Toronto Dominion and Aurora Spine

Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Aurora Spine 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 Aurora Spine 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 Aurora Spine Corp, you can compare the effects of market volatilities on Toronto Dominion and Aurora Spine 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 Aurora Spine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Aurora Spine.

Diversification Opportunities for Toronto Dominion and Aurora Spine

-0.67

Correlation Coefficient

Toronto Dominion  Aurora Spine

Excellent diversification

The 3 months correlation between Toronto and Aurora is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank Pref and Aurora Spine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine Corp 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 Aurora Spine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Spine Corp has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Aurora Spine go up and down completely randomly.

Pair Corralation between Toronto Dominion and Aurora Spine

Assuming the 90 days trading horizon Toronto Dominion Bank Pref is expected to generate 0.07 times more return on investment than Aurora Spine. However, Toronto Dominion Bank Pref is 14.55 times less risky than Aurora Spine. It trades about 0.19 of its potential returns per unit of risk. Aurora Spine Corp is currently generating about -0.03 per unit of risk. If you would invest  2,400  in Toronto Dominion Bank Pref on February 26, 2024 and sell it today you would earn a total of  130.00  from holding Toronto Dominion Bank Pref or generate 5.42% return on investment over 90 days.

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

Toronto Dominion Bank Pref  vs.  Aurora Spine Corp

Toronto Dominion Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank Pref are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Toronto Dominion is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aurora Spine Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Spine Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Toronto Dominion and Aurora Spine

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

The idea behind Toronto Dominion Bank Pref and Aurora Spine 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.