Correlation Between Applied Materials, and Toronto Dominion

Can any of the company-specific risk be diversified away by investing in both Applied Materials, and Toronto Dominion 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 Applied Materials, and Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Materials, and Toronto Dominion Bank, you can compare the effects of market volatilities on Applied Materials, and Toronto Dominion 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 Applied Materials, with a short position of Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials, and Toronto Dominion.

Diversification Opportunities for Applied Materials, and Toronto Dominion

0.69

Correlation Coefficient

Applied Materials,  Toronto Dominion

Poor diversification

The 3 months correlation between Applied and Toronto is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion Bank and Applied Materials, 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 Applied Materials, are associated (or correlated) with Toronto Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion Bank has no effect on the direction of Applied Materials, i.e., Applied Materials, and Toronto Dominion go up and down completely randomly.

Pair Corralation between Applied Materials, and Toronto Dominion

Assuming the 90 days trading horizon Applied Materials, is expected to generate 8.46 times more return on investment than Toronto Dominion. However, Applied Materials, is 8.46 times more volatile than Toronto Dominion Bank. It trades about 0.25 of its potential returns per unit of risk. Toronto Dominion Bank is currently generating about 0.22 per unit of risk. If you would invest  1,552  in Applied Materials, on April 20, 2025 and sell it today you would earn a total of  619.00  from holding Applied Materials, or generate 39.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.78%
Values	Daily Returns

Applied Materials,  vs.  Toronto Dominion Bank

Applied Materials,

Risk-Adjusted Performance

Solid

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

Toronto Dominion Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toronto Dominion Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Toronto Dominion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Materials, and Toronto Dominion

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

The idea behind Applied Materials, and Toronto Dominion Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..