Correlation Between RBC Canadian and RBC Dactions

Can any of the company-specific risk be diversified away by investing in both RBC Canadian and RBC Dactions 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 Dactions 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 dactions mondiales, you can compare the effects of market volatilities on RBC Canadian and RBC Dactions 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 Dactions. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and RBC Dactions.

Diversification Opportunities for RBC Canadian and RBC Dactions

0.92

Correlation Coefficient

RBC Canadian  RBC Dactions

Almost no diversification

The 3 months correlation between RBC and RBC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and RBC dactions mondiales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC dactions mondiales 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 Dactions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC dactions mondiales has no effect on the direction of RBC Canadian i.e., RBC Canadian and RBC Dactions go up and down completely randomly.

Pair Corralation between RBC Canadian and RBC Dactions

Assuming the 90 days trading horizon RBC Canadian Equity is expected to generate 0.42 times more return on investment than RBC Dactions. However, RBC Canadian Equity is 2.36 times less risky than RBC Dactions. It trades about -0.1 of its potential returns per unit of risk. RBC dactions mondiales is currently generating about -0.12 per unit of risk. If you would invest  3,203  in RBC Canadian Equity on November 29, 2024 and sell it today you would lose (161.00) from holding RBC Canadian Equity or give up 5.03% of portfolio value over 90 days.

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

RBC Canadian Equity  vs.  RBC dactions mondiales

RBC Canadian Equity

Risk-Adjusted Performance

Very Weak

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

RBC dactions mondiales

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC dactions mondiales has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with RBC Canadian and RBC Dactions

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

The idea behind RBC Canadian Equity and RBC dactions mondiales 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.