Correlation Between IShares SPTSX and TD Canadian

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

By analyzing existing cross correlation between iShares SPTSX Capped and TD Canadian Aggregate, you can compare the effects of market volatilities on IShares SPTSX and TD Canadian 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 IShares SPTSX with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and TD Canadian.

Diversification Opportunities for IShares SPTSX and TD Canadian

-0.41

Correlation Coefficient

IShares SPTSX  TD Canadian

Very good diversification

The 3 months correlation between IShares and TDB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and TD Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Aggregate and IShares SPTSX 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 iShares SPTSX Capped are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Aggregate has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and TD Canadian go up and down completely randomly.

Pair Corralation between IShares SPTSX and TD Canadian

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 4.31 times more return on investment than TD Canadian. However, IShares SPTSX is 4.31 times more volatile than TD Canadian Aggregate. It trades about 0.13 of its potential returns per unit of risk. TD Canadian Aggregate is currently generating about -0.04 per unit of risk. If you would invest  1,561  in iShares SPTSX Capped on April 24, 2025 and sell it today you would earn a total of  171.00  from holding iShares SPTSX Capped or generate 10.95% return on investment over 90 days.

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

iShares SPTSX Capped  vs.  TD Canadian Aggregate

iShares SPTSX Capped

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IShares SPTSX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

TD Canadian Aggregate

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Canadian Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, TD Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares SPTSX and TD Canadian

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

The idea behind iShares SPTSX Capped and TD Canadian Aggregate 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.