Correlation Between TD Canadian and Global Dividend

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

Diversification Opportunities for TD Canadian and Global Dividend

-0.5

Correlation Coefficient

TD Canadian  Global Dividend

Very good diversification

The 3 months correlation between TCLB and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth 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 Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of TD Canadian i.e., TD Canadian and Global Dividend go up and down completely randomly.

Pair Corralation between TD Canadian and Global Dividend

Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the Global Dividend. But the etf apears to be less risky and, when comparing its historical volatility, TD Canadian Long is 1.16 times less risky than Global Dividend. The etf trades about -0.09 of its potential returns per unit of risk. The Global Dividend Growth is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  994.00  in Global Dividend Growth on April 23, 2025 and sell it today you would earn a total of  109.00  from holding Global Dividend Growth or generate 10.97% return on investment over 90 days.

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

TD Canadian Long  vs.  Global Dividend Growth

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.

Global Dividend Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Dividend Growth are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Dividend may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TD Canadian and Global Dividend

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

The idea behind TD Canadian Long and Global Dividend Growth 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.