Correlation Between RBC Select and RBC Portefeuille

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

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

Diversification Opportunities for RBC Select and RBC Portefeuille

1.0

Correlation Coefficient

RBC Select  RBC Portefeuille

No risk reduction

The 3 months correlation between RBC and RBC is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding RBC Select Balanced and RBC Portefeuille de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Portefeuille and RBC Select 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 Select Balanced are associated (or correlated) with RBC Portefeuille. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Portefeuille has no effect on the direction of RBC Select i.e., RBC Select and RBC Portefeuille go up and down completely randomly.

Pair Corralation between RBC Select and RBC Portefeuille

Assuming the 90 days trading horizon RBC Select Balanced is expected to under-perform the RBC Portefeuille. But the fund apears to be less risky and, when comparing its historical volatility, RBC Select Balanced is 1.11 times less risky than RBC Portefeuille. The fund trades about -0.08 of its potential returns per unit of risk. The RBC Portefeuille de is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,163  in RBC Portefeuille de on November 29, 2024 and sell it today you would lose (122.00) from holding RBC Portefeuille de or give up 2.93% of portfolio value over 90 days.

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

RBC Select Balanced  vs.  RBC Portefeuille de

RBC Select Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Select Balanced 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.

RBC Portefeuille

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Portefeuille de has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, RBC Portefeuille 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 Select and RBC Portefeuille

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

The idea behind RBC Select Balanced and RBC Portefeuille de 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.