Correlation Between CI Canada and RBC Quant

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

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

Diversification Opportunities for CI Canada and RBC Quant

0.25

Correlation Coefficient

CI Canada  RBC Quant

Modest diversification

The 3 months correlation between DGRC and RBC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CI Canada Quality and RBC Quant Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Canadian and CI Canada 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 Canada Quality are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant Canadian has no effect on the direction of CI Canada i.e., CI Canada and RBC Quant go up and down completely randomly.

Pair Corralation between CI Canada and RBC Quant

Assuming the 90 days trading horizon CI Canada Quality is expected to generate 0.56 times more return on investment than RBC Quant. However, CI Canada Quality is 1.8 times less risky than RBC Quant. It trades about -0.02 of its potential returns per unit of risk. RBC Quant Canadian is currently generating about -0.11 per unit of risk. If you would invest  4,026  in CI Canada Quality on December 2, 2024 and sell it today you would lose (32.00) from holding CI Canada Quality or give up 0.79% of portfolio value over 90 days.

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

CI Canada Quality  vs.  RBC Quant Canadian

CI Canada Quality

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Canada Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Canada is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

RBC Quant Canadian

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Quant Canadian has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with CI Canada and RBC Quant

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

The idea behind CI Canada Quality and RBC Quant Canadian 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.