Correlation Between Short Duration and Rbc Emerging

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

By analyzing existing cross correlation between Short Duration Inflation and Rbc Emerging Markets, you can compare the effects of market volatilities on Short Duration and Rbc Emerging 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 Short Duration with a short position of Rbc Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Rbc Emerging.

Diversification Opportunities for Short Duration and Rbc Emerging

0.54

Correlation Coefficient

Short Duration  Rbc Emerging

Very weak diversification

The 3 months correlation between Short and Rbc is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Rbc Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Emerging Markets and Short Duration 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 Short Duration Inflation are associated (or correlated) with Rbc Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Emerging Markets has no effect on the direction of Short Duration i.e., Short Duration and Rbc Emerging go up and down completely randomly.

Pair Corralation between Short Duration and Rbc Emerging

Assuming the 90 days horizon Short Duration Inflation is expected to generate 0.52 times more return on investment than Rbc Emerging. However, Short Duration Inflation is 1.91 times less risky than Rbc Emerging. It trades about -0.15 of its potential returns per unit of risk. Rbc Emerging Markets is currently generating about -0.26 per unit of risk. If you would invest  1,053  in Short Duration Inflation on October 8, 2024 and sell it today you would lose (25.00) from holding Short Duration Inflation or give up 2.37% of portfolio value over 90 days.

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

Short Duration Inflation  vs.  Rbc Emerging Markets

Short Duration Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Duration Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbc Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of 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.

Pair Trading with Short Duration and Rbc Emerging

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

The idea behind Short Duration Inflation and Rbc Emerging Markets 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.