Correlation Between RBC Sciences and RBC Select

Can any of the company-specific risk be diversified away by investing in both RBC Sciences 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 Sciences 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 sciences biologiques and RBC Select Balanced, you can compare the effects of market volatilities on RBC Sciences 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 Sciences with a short position of RBC Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Sciences and RBC Select.

Diversification Opportunities for RBC Sciences and RBC Select

-0.23

Correlation Coefficient

RBC Sciences  RBC Select

Very good diversification

The 3 months correlation between RBC and RBC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding RBC sciences biologiques and RBC Select Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Select Balanced and RBC Sciences 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 sciences biologiques 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 Balanced has no effect on the direction of RBC Sciences i.e., RBC Sciences and RBC Select go up and down completely randomly.

Pair Corralation between RBC Sciences and RBC Select

Assuming the 90 days trading horizon RBC sciences biologiques is expected to generate 1.7 times more return on investment than RBC Select. However, RBC Sciences is 1.7 times more volatile than RBC Select Balanced. It trades about 0.03 of its potential returns per unit of risk. RBC Select Balanced is currently generating about -0.08 per unit of risk. If you would invest  5,366  in RBC sciences biologiques on November 29, 2024 and sell it today you would earn a total of  68.00  from holding RBC sciences biologiques or generate 1.27% return on investment over 90 days.

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

RBC sciences biologiques  vs.  RBC Select Balanced

RBC sciences biologiques

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC sciences biologiques are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, RBC Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with RBC Sciences and RBC Select

The main advantage of trading using opposite RBC Sciences and RBC Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Sciences 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 sciences biologiques and RBC Select Balanced 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.