Correlation Between IShares Core and TD Canadian

Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core SPTSX and TD Canadian Equity, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and TD Canadian.

Diversification Opportunities for IShares Core and TD Canadian

1.0

Correlation Coefficient

IShares Core  TD Canadian

No risk reduction

The 3 months correlation between IShares and TTP is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and TD Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Equity and IShares Core 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 Core SPTSX 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 Equity has no effect on the direction of IShares Core i.e., IShares Core and TD Canadian go up and down completely randomly.

Pair Corralation between IShares Core and TD Canadian

Assuming the 90 days trading horizon IShares Core is expected to generate 1.02 times less return on investment than TD Canadian. But when comparing it to its historical volatility, iShares Core SPTSX is 1.01 times less risky than TD Canadian. It trades about 0.47 of its potential returns per unit of risk. TD Canadian Equity is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  2,764  in TD Canadian Equity on April 22, 2025 and sell it today you would earn a total of  365.00  from holding TD Canadian Equity or generate 13.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

iShares Core SPTSX  vs.  TD Canadian Equity

iShares Core SPTSX

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SPTSX are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in August 2025.

TD Canadian Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Equity are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TD Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Core and TD Canadian

The main advantage of trading using opposite IShares Core and TD Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core SPTSX and TD Canadian Equity 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.