Correlation Between TD Canadian and PICTON Credit

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

By analyzing existing cross correlation between TD Canadian Bond and PICTON Credit Opportunities, you can compare the effects of market volatilities on TD Canadian and PICTON Credit 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 PICTON Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and PICTON Credit.

Diversification Opportunities for TD Canadian and PICTON Credit

-0.66

Correlation Coefficient

TD Canadian  PICTON Credit

Excellent diversification

The 3 months correlation between TDB909 and PICTON is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Bond and PICTON Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICTON Credit Opport 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 Bond are associated (or correlated) with PICTON Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICTON Credit Opport has no effect on the direction of TD Canadian i.e., TD Canadian and PICTON Credit go up and down completely randomly.

Pair Corralation between TD Canadian and PICTON Credit

Assuming the 90 days trading horizon TD Canadian Bond is expected to under-perform the PICTON Credit. But the fund apears to be less risky and, when comparing its historical volatility, TD Canadian Bond is 1.3 times less risky than PICTON Credit. The fund trades about -0.08 of its potential returns per unit of risk. The PICTON Credit Opportunities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  934.00  in PICTON Credit Opportunities on April 20, 2025 and sell it today you would earn a total of  31.00  from holding PICTON Credit Opportunities or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

TD Canadian Bond  vs.  PICTON Credit Opportunities

TD Canadian Bond

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Canadian Bond has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental drivers, TD Canadian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PICTON Credit Opport

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICTON Credit Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, PICTON Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD Canadian and PICTON Credit

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

The idea behind TD Canadian Bond and PICTON Credit Opportunities 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.