Correlation Between IShares SPTSX and TD International

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

Diversification Opportunities for IShares SPTSX and TD International

0.94

Correlation Coefficient

IShares SPTSX  TD International

Almost no diversification

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

Pair Corralation between IShares SPTSX and TD International

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 2.02 times more return on investment than TD International. However, IShares SPTSX is 2.02 times more volatile than TD International Equity. It trades about 0.2 of its potential returns per unit of risk. TD International Equity is currently generating about 0.18 per unit of risk. If you would invest  6,267  in iShares SPTSX Capped on April 23, 2025 and sell it today you would earn a total of  1,126  from holding iShares SPTSX Capped or generate 17.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

iShares SPTSX Capped  vs.  TD International Equity

iShares SPTSX Capped

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

TD International Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD International Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, TD International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares SPTSX and TD International

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

The idea behind iShares SPTSX Capped and TD International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.