Correlation Between Mawer Global and RBC Mondial

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

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

Diversification Opportunities for Mawer Global and RBC Mondial

-0.65

Correlation Coefficient

Mawer Global  RBC Mondial

Excellent diversification

The 3 months correlation between Mawer and RBC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Global Small and RBC mondial dnergie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC mondial dnergie and Mawer 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 Mawer Global Small are associated (or correlated) with RBC Mondial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC mondial dnergie has no effect on the direction of Mawer Global i.e., Mawer Global and RBC Mondial go up and down completely randomly.

Pair Corralation between Mawer Global and RBC Mondial

Assuming the 90 days trading horizon Mawer Global is expected to generate 4.54 times less return on investment than RBC Mondial. But when comparing it to its historical volatility, Mawer Global Small is 1.32 times less risky than RBC Mondial. It trades about 0.07 of its potential returns per unit of risk. RBC mondial dnergie is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,661  in RBC mondial dnergie on September 4, 2024 and sell it today you would earn a total of  264.00  from holding RBC mondial dnergie or generate 4.66% return on investment over 90 days.

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

Mawer Global Small  vs.  RBC mondial dnergie

Mawer Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mawer Global Small has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Mawer Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RBC mondial dnergie

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC mondial dnergie are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, RBC Mondial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mawer Global and RBC Mondial

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

The idea behind Mawer Global Small and RBC mondial dnergie 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.