Correlation Between Wealthsimple Shariah and Toll Brothers

Can any of the company-specific risk be diversified away by investing in both Wealthsimple Shariah and Toll Brothers 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 Wealthsimple Shariah and Toll Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wealthsimple Shariah World and Toll Brothers, you can compare the effects of market volatilities on Wealthsimple Shariah and Toll Brothers 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 Wealthsimple Shariah with a short position of Toll Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and Toll Brothers.

Diversification Opportunities for Wealthsimple Shariah and Toll Brothers

0.19

Correlation Coefficient

Wealthsimple Shariah  Toll Brothers

Average diversification

The 3 months correlation between Wealthsimple and Toll is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and Toll Brothers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toll Brothers and Wealthsimple Shariah 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 Wealthsimple Shariah World are associated (or correlated) with Toll Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toll Brothers has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and Toll Brothers go up and down completely randomly.

Pair Corralation between Wealthsimple Shariah and Toll Brothers

Assuming the 90 days trading horizon Wealthsimple Shariah World is expected to generate 0.44 times more return on investment than Toll Brothers. However, Wealthsimple Shariah World is 2.3 times less risky than Toll Brothers. It trades about 0.0 of its potential returns per unit of risk. Toll Brothers is currently generating about -0.03 per unit of risk. If you would invest  3,242  in Wealthsimple Shariah World on September 9, 2025 and sell it today you would lose (12.00) from holding Wealthsimple Shariah World or give up 0.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Wealthsimple Shariah World  vs.  Toll Brothers

Wealthsimple Shariah

Risk-Adjusted Performance

Weakest

Over the last 90 days Wealthsimple Shariah World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Wealthsimple Shariah is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Toll Brothers

Risk-Adjusted Performance

Weakest

Over the last 90 days Toll Brothers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Toll Brothers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wealthsimple Shariah and Toll Brothers

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

The idea behind Wealthsimple Shariah World and Toll Brothers 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.