Correlation Between Toronto Dominion and Maple Leaf

Can any of the company-specific risk be diversified away by investing in both Toronto Dominion and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on Toronto Dominion and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toronto Dominion and Maple Leaf.

Diversification Opportunities for Toronto Dominion and Maple Leaf

0.89

Correlation Coefficient

Toronto Dominion  Maple Leaf

Very poor diversification

The 3 months correlation between Toronto and Maple is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Toronto Dominion Bank and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Toronto Dominion i.e., Toronto Dominion and Maple Leaf go up and down completely randomly.

Pair Corralation between Toronto Dominion and Maple Leaf

Assuming the 90 days trading horizon Toronto Dominion is expected to generate 6.24 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, Toronto Dominion Bank is 4.46 times less risky than Maple Leaf. It trades about 0.22 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,428  in Maple Leaf Foods on April 22, 2025 and sell it today you would earn a total of  598.00  from holding Maple Leaf Foods or generate 24.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	78.13%
Values	Daily Returns

Toronto Dominion Bank  vs.  Maple Leaf Foods

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.

Maple Leaf Foods

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Maple Leaf displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toronto Dominion and Maple Leaf

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

The idea behind Toronto Dominion Bank and Maple Leaf Foods 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.