Correlation Between RBC Canadian and CI Global

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

Diversification Opportunities for RBC Canadian and CI Global

0.81

Correlation Coefficient

RBC Canadian  CI Global

Very poor diversification

The 3 months correlation between RBC and CIG18006 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and CI Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Alpha 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 CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Alpha has no effect on the direction of RBC Canadian i.e., RBC Canadian and CI Global go up and down completely randomly.

Pair Corralation between RBC Canadian and CI Global

Assuming the 90 days trading horizon RBC Canadian is expected to generate 4.92 times less return on investment than CI Global. But when comparing it to its historical volatility, RBC Canadian Equity is 3.19 times less risky than CI Global. It trades about 0.19 of its potential returns per unit of risk. CI Global Alpha is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  8,697  in CI Global Alpha on September 12, 2024 and sell it today you would earn a total of  2,298  from holding CI Global Alpha or generate 26.42% return on investment over 90 days.

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

RBC Canadian Equity  vs.  CI Global Alpha

RBC Canadian Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. 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.

CI Global Alpha

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Alpha are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, CI Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Canadian and CI Global

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

The idea behind RBC Canadian Equity and CI Global Alpha 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.