Correlation Between CI Global and RBC Global

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

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

Diversification Opportunities for CI Global and RBC Global

0.97

Correlation Coefficient

CI Global  RBC Global

Almost no diversification

The 3 months correlation between 0P000070HA and RBC is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Alpha and RBC Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Global Technology and CI Global 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 CI Global Alpha are associated (or correlated) with RBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Global Technology has no effect on the direction of CI Global i.e., CI Global and RBC Global go up and down completely randomly.

Pair Corralation between CI Global and RBC Global

Assuming the 90 days trading horizon CI Global Alpha is expected to generate 1.2 times more return on investment than RBC Global. However, CI Global is 1.2 times more volatile than RBC Global Technology. It trades about 0.27 of its potential returns per unit of risk. RBC Global Technology is currently generating about 0.2 per unit of risk. If you would invest  8,415  in CI Global Alpha on August 31, 2024 and sell it today you would earn a total of  1,984  from holding CI Global Alpha or generate 23.58% return on investment over 90 days.

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

CI Global Alpha  vs.  RBC Global Technology

CI Global Alpha

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Alpha are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, CI Global sustained solid returns over the last few months and may actually be approaching a breakup point.

RBC Global Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Technology are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CI Global and RBC Global

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

The idea behind CI Global Alpha and RBC Global Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.