Correlation Between CI Global and RBC Global

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

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

Diversification Opportunities for CI Global and RBC Global

0.07

Correlation Coefficient

CI Global  RBC Global

Significant diversification

The 3 months correlation between CUBD and RBC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Unconstrained and RBC Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Global Equity and CI 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 CI Global Unconstrained are associated (or correlated) with RBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Global Equity has no effect on the direction of CI Global i.e., CI Global and RBC Global go up and down completely randomly.

Pair Corralation between CI Global and RBC Global

Assuming the 90 days trading horizon CI Global is expected to generate 12.66 times less return on investment than RBC Global. But when comparing it to its historical volatility, CI Global Unconstrained is 2.54 times less risky than RBC Global. It trades about 0.04 of its potential returns per unit of risk. RBC Global Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,567  in RBC Global Equity on October 26, 2024 and sell it today you would earn a total of  82.00  from holding RBC Global Equity or generate 3.19% return on investment over 90 days.

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

CI Global Unconstrained  vs.  RBC Global Equity

CI Global Unconstrained

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Unconstrained are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, CI Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

RBC Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CI Global and RBC Global

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

The idea behind CI Global Unconstrained and RBC Global Equity 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.