Correlation Between RBC Canadian and RBC Select

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

By analyzing existing cross correlation between RBC Canadian Equity and RBC Select Choices, you can compare the effects of market volatilities on RBC Canadian and RBC Select 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 RBC Canadian with a short position of RBC Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and RBC Select.

Diversification Opportunities for RBC Canadian and RBC Select

0.0

Correlation Coefficient

RBC Canadian  RBC Select

Pay attention - limited upside

The 3 months correlation between RBC and RBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and RBC Select Choices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Select Choices and RBC 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 RBC Canadian Equity are associated (or correlated) with RBC Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Select Choices has no effect on the direction of RBC Canadian i.e., RBC Canadian and RBC Select go up and down completely randomly.

Pair Corralation between RBC Canadian and RBC Select

If you would invest  2,887  in RBC Canadian Equity on September 4, 2024 and sell it today you would earn a total of  316.00  from holding RBC Canadian Equity or generate 10.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RBC Canadian Equity  vs.  RBC Select Choices

RBC Canadian Equity

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Equity are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RBC Select Choices

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days RBC Select Choices has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, RBC Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RBC Canadian and RBC Select

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

The idea behind RBC Canadian Equity and RBC Select Choices 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.