Correlation Between RBC Global and Desjardins Sustainable

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

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

Diversification Opportunities for RBC Global and Desjardins Sustainable

0.92

Correlation Coefficient

RBC Global  Desjardins Sustainable

Almost no diversification

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

Pair Corralation between RBC Global and Desjardins Sustainable

Assuming the 90 days trading horizon RBC Global Technology is expected to generate 2.55 times more return on investment than Desjardins Sustainable. However, RBC Global is 2.55 times more volatile than Desjardins Sustainable Maximum. It trades about 0.23 of its potential returns per unit of risk. Desjardins Sustainable Maximum is currently generating about 0.2 per unit of risk. If you would invest  1,578  in RBC Global Technology on September 13, 2024 and sell it today you would earn a total of  244.00  from holding RBC Global Technology or generate 15.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

RBC Global Technology  vs.  Desjardins Sustainable Maximum

RBC Global Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Technology are ranked lower than 17 (%) 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.

Desjardins Sustainable

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins Sustainable Maximum are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady forward-looking indicators, Desjardins Sustainable is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with RBC Global and Desjardins Sustainable

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

The idea behind RBC Global Technology and Desjardins Sustainable Maximum 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.