Correlation Between TD Canadian and CIBC Clean

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

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

Diversification Opportunities for TD Canadian and CIBC Clean

-0.6

Correlation Coefficient

TD Canadian  CIBC Clean

Excellent diversification

The 3 months correlation between TCLB and CIBC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and CIBC Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Clean Energy and TD Canadian 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 Canadian Long are associated (or correlated) with CIBC Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Clean Energy has no effect on the direction of TD Canadian i.e., TD Canadian and CIBC Clean go up and down completely randomly.

Pair Corralation between TD Canadian and CIBC Clean

Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the CIBC Clean. But the etf apears to be less risky and, when comparing its historical volatility, TD Canadian Long is 3.17 times less risky than CIBC Clean. The etf trades about -0.09 of its potential returns per unit of risk. The CIBC Clean Energy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  607.00  in CIBC Clean Energy on April 23, 2025 and sell it today you would earn a total of  223.00  from holding CIBC Clean Energy or generate 36.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TD Canadian Long  vs.  CIBC Clean Energy

TD Canadian Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Canadian Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TD Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CIBC Clean Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Clean Energy 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, CIBC Clean exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TD Canadian and CIBC Clean

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

The idea behind TD Canadian Long and CIBC Clean Energy 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.