Correlation Between Intermediate Government and Rbc China

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

By analyzing existing cross correlation between Intermediate Government Bond and Rbc China Equity, you can compare the effects of market volatilities on Intermediate Government and Rbc China 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 Intermediate Government with a short position of Rbc China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Rbc China.

Diversification Opportunities for Intermediate Government and Rbc China

-0.25

Correlation Coefficient

Intermediate Government  Rbc China

Very good diversification

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

Pair Corralation between Intermediate Government and Rbc China

Assuming the 90 days horizon Intermediate Government Bond is expected to generate 0.09 times more return on investment than Rbc China. However, Intermediate Government Bond is 11.35 times less risky than Rbc China. It trades about 0.11 of its potential returns per unit of risk. Rbc China Equity is currently generating about -0.02 per unit of risk. If you would invest  880.00  in Intermediate Government Bond on October 11, 2024 and sell it today you would earn a total of  65.00  from holding Intermediate Government Bond or generate 7.39% return on investment over 90 days.

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

Intermediate Government Bond  vs.  Rbc China Equity

Intermediate Government

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Government Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Intermediate Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbc China Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc China Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Intermediate Government and Rbc China

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

The idea behind Intermediate Government Bond and Rbc China 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.