Correlation Between TD Canadian and IShares Conservative

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

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

Diversification Opportunities for TD Canadian and IShares Conservative

0.87

Correlation Coefficient

TD Canadian  IShares Conservative

Very poor diversification

The 3 months correlation between TCLB and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and iShares Conservative Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Conservative and TD Canadian 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 TD Canadian Long are associated (or correlated) with IShares Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Conservative has no effect on the direction of TD Canadian i.e., TD Canadian and IShares Conservative go up and down completely randomly.

Pair Corralation between TD Canadian and IShares Conservative

Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the IShares Conservative. In addition to that, TD Canadian is 3.15 times more volatile than iShares Conservative Short. It trades about -0.03 of its total potential returns per unit of risk. iShares Conservative Short is currently generating about 0.07 per unit of volatility. If you would invest  1,802  in iShares Conservative Short on July 17, 2025 and sell it today you would earn a total of  3.00  from holding iShares Conservative Short or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

TD Canadian Long  vs.  iShares Conservative Short

TD Canadian Long

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Long are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Conservative Short are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, IShares Conservative is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD Canadian and IShares Conservative

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

The idea behind TD Canadian Long and iShares Conservative Short 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.