Correlation Between TD Index and IProfile Emerging

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

By analyzing existing cross correlation between TD Index Fund E and iProfile Emerging Markets, you can compare the effects of market volatilities on TD Index and IProfile Emerging 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 Index with a short position of IProfile Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Index and IProfile Emerging.

Diversification Opportunities for TD Index and IProfile Emerging

0.59

Correlation Coefficient

TD Index  IProfile Emerging

Very weak diversification

The 3 months correlation between TDB902 and IProfile is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TD Index Fund E and iProfile Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iProfile Emerging Markets and TD Index 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 Index Fund E are associated (or correlated) with IProfile Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iProfile Emerging Markets has no effect on the direction of TD Index i.e., TD Index and IProfile Emerging go up and down completely randomly.

Pair Corralation between TD Index and IProfile Emerging

Assuming the 90 days trading horizon TD Index Fund E is expected to generate 1.19 times more return on investment than IProfile Emerging. However, TD Index is 1.19 times more volatile than iProfile Emerging Markets. It trades about 0.31 of its potential returns per unit of risk. iProfile Emerging Markets is currently generating about 0.34 per unit of risk. If you would invest  12,854  in TD Index Fund E on April 22, 2025 and sell it today you would earn a total of  2,476  from holding TD Index Fund E or generate 19.26% return on investment over 90 days.

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

TD Index Fund E  vs.  iProfile Emerging Markets

TD Index Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Index Fund E are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental drivers, TD Index sustained solid returns over the last few months and may actually be approaching a breakup point.

iProfile Emerging Markets

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iProfile Emerging Markets are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unfluctuating essential indicators, IProfile Emerging disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TD Index and IProfile Emerging

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

The idea behind TD Index Fund E and iProfile Emerging Markets 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.