Correlation Between Toronto Dominion and Atrium Mortgage

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

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

Diversification Opportunities for Toronto Dominion and Atrium Mortgage

0.82

Correlation Coefficient

Toronto Dominion  Atrium Mortgage

Very poor diversification

The 3 months correlation between Toronto and Atrium is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Atrium Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Mortgage Inve and Toronto Dominion 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 Toronto Dominion Bank are associated (or correlated) with Atrium Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Mortgage Inve has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Atrium Mortgage go up and down completely randomly.

Pair Corralation between Toronto Dominion and Atrium Mortgage

Assuming the 90 days trading horizon Toronto Dominion is expected to generate 2.61 times less return on investment than Atrium Mortgage. But when comparing it to its historical volatility, Toronto Dominion Bank is 2.9 times less risky than Atrium Mortgage. It trades about 0.22 of its potential returns per unit of risk. Atrium Mortgage Investment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,062  in Atrium Mortgage Investment on April 22, 2025 and sell it today you would earn a total of  101.00  from holding Atrium Mortgage Investment or generate 9.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	79.37%
Values	Daily Returns

Toronto Dominion Bank  vs.  Atrium Mortgage Investment

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 16 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Atrium Mortgage Inve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atrium Mortgage Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Atrium Mortgage may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Toronto Dominion and Atrium Mortgage

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

The idea behind Toronto Dominion Bank and Atrium Mortgage Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.