Correlation Between NBI Sustainable and TD Canadian

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

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

Diversification Opportunities for NBI Sustainable and TD Canadian

0.94

Correlation Coefficient

NBI Sustainable  TD Canadian

Almost no diversification

The 3 months correlation between NBI and TTP is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NBI Sustainable Canadian and TD Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Equity and NBI Sustainable 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 NBI Sustainable Canadian are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Equity has no effect on the direction of NBI Sustainable i.e., NBI Sustainable and TD Canadian go up and down completely randomly.

Pair Corralation between NBI Sustainable and TD Canadian

Assuming the 90 days trading horizon NBI Sustainable is expected to generate 1.68 times less return on investment than TD Canadian. In addition to that, NBI Sustainable is 1.33 times more volatile than TD Canadian Equity. It trades about 0.2 of its total potential returns per unit of risk. TD Canadian Equity is currently generating about 0.46 per unit of volatility. If you would invest  2,813  in TD Canadian Equity on April 25, 2025 and sell it today you would earn a total of  329.00  from holding TD Canadian Equity or generate 11.7% return on investment over 90 days.

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

NBI Sustainable Canadian  vs.  TD Canadian Equity

NBI Sustainable Canadian

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Sustainable Canadian are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, NBI Sustainable may actually be approaching a critical reversion point that can send shares even higher in August 2025.

TD Canadian Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Equity are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TD Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with NBI Sustainable and TD Canadian

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

The idea behind NBI Sustainable Canadian and TD Canadian Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.