Correlation Between Tech Leaders and TD Active

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

By analyzing existing cross correlation between Tech Leaders Income and TD Active Preferred, you can compare the effects of market volatilities on Tech Leaders and TD Active 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 Tech Leaders with a short position of TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tech Leaders and TD Active.

Diversification Opportunities for Tech Leaders and TD Active

0.98

Correlation Coefficient

Tech Leaders  TD Active

Almost no diversification

The 3 months correlation between Tech and TPRF is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Tech Leaders Income and TD Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Preferred and Tech Leaders 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 Tech Leaders Income are associated (or correlated) with TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Preferred has no effect on the direction of Tech Leaders i.e., Tech Leaders and TD Active go up and down completely randomly.

Pair Corralation between Tech Leaders and TD Active

Assuming the 90 days trading horizon Tech Leaders Income is expected to generate 3.85 times more return on investment than TD Active. However, Tech Leaders is 3.85 times more volatile than TD Active Preferred. It trades about 0.41 of its potential returns per unit of risk. TD Active Preferred is currently generating about 0.73 per unit of risk. If you would invest  1,965  in Tech Leaders Income on April 20, 2025 and sell it today you would earn a total of  637.00  from holding Tech Leaders Income or generate 32.42% return on investment over 90 days.

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

Tech Leaders Income  vs.  TD Active Preferred

Tech Leaders Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tech Leaders Income are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tech Leaders displayed solid returns over the last few months and may actually be approaching a breakup point.

TD Active Preferred

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in TD Active Preferred are ranked lower than 57 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TD Active displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tech Leaders and TD Active

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

The idea behind Tech Leaders Income and TD Active Preferred 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.