Correlation Between TD Active and IShares Global

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Can any of the company-specific risk be diversified away by investing in both TD Active and IShares Global 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 Active and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Active Global and iShares Global Infrastructure, you can compare the effects of market volatilities on TD Active and IShares Global 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 Active with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Active and IShares Global.

Diversification Opportunities for TD Active and IShares Global

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between TINF and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TD Active Global and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and TD Active 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 Active Global are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of TD Active i.e., TD Active and IShares Global go up and down completely randomly.

Pair Corralation between TD Active and IShares Global

Assuming the 90 days trading horizon TD Active is expected to generate 2.5 times less return on investment than IShares Global. But when comparing it to its historical volatility, TD Active Global is 1.14 times less risky than IShares Global. It trades about 0.2 of its potential returns per unit of risk. iShares Global Infrastructure is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  4,420  in iShares Global Infrastructure on April 20, 2025 and sell it today you would earn a total of  903.00  from holding iShares Global Infrastructure or generate 20.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.44%
ValuesDaily Returns

TD Active Global  vs.  iShares Global Infrastructure

 Performance 
       Timeline  
TD Active Global 

Risk-Adjusted Performance

Good

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

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Infrastructure are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IShares Global displayed solid returns over the last few months and may actually be approaching a breakup point.

TD Active and IShares Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TD Active and IShares Global

The main advantage of trading using opposite TD Active and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Active position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.
The idea behind TD Active Global and iShares Global Infrastructure 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.
Check out your portfolio center.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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