Correlation Between TD Canadian and Evolve European

Can any of the company-specific risk be diversified away by investing in both TD Canadian and Evolve European 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 Evolve European 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 Evolve European Banks, you can compare the effects of market volatilities on TD Canadian and Evolve European 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 Evolve European. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and Evolve European.

Diversification Opportunities for TD Canadian and Evolve European

-0.68

Correlation Coefficient

TD Canadian  Evolve European

Excellent diversification

The 3 months correlation between TCLB and Evolve is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and Evolve European Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve European Banks 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 Evolve European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve European Banks has no effect on the direction of TD Canadian i.e., TD Canadian and Evolve European go up and down completely randomly.

Pair Corralation between TD Canadian and Evolve European

Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the Evolve European. But the etf apears to be less risky and, when comparing its historical volatility, TD Canadian Long is 1.96 times less risky than Evolve European. The etf trades about -0.09 of its potential returns per unit of risk. The Evolve European Banks is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,271  in Evolve European Banks on April 23, 2025 and sell it today you would earn a total of  188.00  from holding Evolve European Banks or generate 14.79% 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.  Evolve European Banks

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.

Evolve European Banks

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve European Banks are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Evolve European sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TD Canadian and Evolve European

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

The idea behind TD Canadian Long and Evolve European Banks 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 Anywhere module to track or share privately all of your investments from the convenience of any device.