Correlation Between RBC Global and Edgepoint Global

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

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

Diversification Opportunities for RBC Global and Edgepoint Global

0.64

Correlation Coefficient

RBC Global  Edgepoint Global

Poor diversification

The 3 months correlation between RBC and Edgepoint is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding RBC Global Equity and Edgepoint Global Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgepoint Global Por 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 Equity are associated (or correlated) with Edgepoint Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgepoint Global Por has no effect on the direction of RBC Global i.e., RBC Global and Edgepoint Global go up and down completely randomly.

Pair Corralation between RBC Global and Edgepoint Global

Assuming the 90 days trading horizon RBC Global Equity is expected to under-perform the Edgepoint Global. In addition to that, RBC Global is 1.99 times more volatile than Edgepoint Global Portfolio. It trades about -0.13 of its total potential returns per unit of risk. Edgepoint Global Portfolio is currently generating about -0.04 per unit of volatility. If you would invest  3,939  in Edgepoint Global Portfolio on December 2, 2024 and sell it today you would lose (85.00) from holding Edgepoint Global Portfolio or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

RBC Global Equity  vs.  Edgepoint Global Portfolio

RBC Global Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Global Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Edgepoint Global Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgepoint Global Portfolio has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady forward-looking indicators, Edgepoint Global is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with RBC Global and Edgepoint Global

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

The idea behind RBC Global Equity and Edgepoint Global Portfolio 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.