Correlation Between TD International and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both TD International and Vanguard FTSE 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 International and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD International Equity and Vanguard FTSE Developed, you can compare the effects of market volatilities on TD International and Vanguard FTSE 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 International with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD International and Vanguard FTSE.
Diversification Opportunities for TD International and Vanguard FTSE
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between THE and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TD International Equity and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and TD International 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 International Equity are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of TD International i.e., TD International and Vanguard FTSE go up and down completely randomly.
Pair Corralation between TD International and Vanguard FTSE
Assuming the 90 days trading horizon TD International Equity is expected to generate 1.12 times more return on investment than Vanguard FTSE. However, TD International is 1.12 times more volatile than Vanguard FTSE Developed. It trades about 0.14 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.08 per unit of risk. If you would invest 2,471 in TD International Equity on March 14, 2024 and sell it today you would earn a total of 135.00 from holding TD International Equity or generate 5.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
TD International Equity vs. Vanguard FTSE Developed
Performance |
Timeline |
TD International Equity |
Vanguard FTSE Developed |
TD International and Vanguard FTSE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TD International and Vanguard FTSE
The main advantage of trading using opposite TD International and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD International position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.TD International vs. Accelerate Absolute Return | TD International vs. Accelerate Arbitrage | TD International vs. Accelerate OneChoice Alternative | TD International vs. First Trust AlphaDEX |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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