Correlation Between TD One and First Trust

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

By analyzing existing cross correlation between TD One Click Moderate and First Trust Nasdaq, you can compare the effects of market volatilities on TD One and First Trust 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 One with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD One and First Trust.

Diversification Opportunities for TD One and First Trust

0.83

Correlation Coefficient

TD One  First Trust

Very poor diversification

The 3 months correlation between TOCM and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TD One Click Moderate and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and TD One 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 One Click Moderate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of TD One i.e., TD One and First Trust go up and down completely randomly.

Pair Corralation between TD One and First Trust

Assuming the 90 days trading horizon TD One is expected to generate 5.94 times less return on investment than First Trust. But when comparing it to its historical volatility, TD One Click Moderate is 4.84 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,755  in First Trust Nasdaq on September 15, 2025 and sell it today you would earn a total of  322.00  from holding First Trust Nasdaq or generate 18.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

TD One Click Moderate  vs.  First Trust Nasdaq

TD One Click

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in TD One Click Moderate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD One is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

First Trust Nasdaq

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Nasdaq 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, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TD One and First Trust

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

The idea behind TD One Click Moderate and First Trust Nasdaq 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.