Correlation Between CI Europe and RBC Quant

Can any of the company-specific risk be diversified away by investing in both CI Europe 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 Europe 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 Europe Hedged and RBC Quant European, you can compare the effects of market volatilities on CI Europe 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 Europe with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Europe and RBC Quant.

Diversification Opportunities for CI Europe and RBC Quant

0.0

Correlation Coefficient

CI Europe  RBC Quant

Pay attention - limited upside

The 3 months correlation between EHE and RBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CI Europe Hedged and RBC Quant European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant European and CI Europe 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 Europe Hedged 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 European has no effect on the direction of CI Europe i.e., CI Europe and RBC Quant go up and down completely randomly.

Pair Corralation between CI Europe and RBC Quant

If you would invest (100.00) in RBC Quant European on September 3, 2024 and sell it today you would earn a total of  100.00  from holding RBC Quant European or generate -100.0% return on investment over 90 days.

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

CI Europe Hedged  vs.  RBC Quant European

CI Europe Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

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

RBC Quant European

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CI Europe and RBC Quant

The main advantage of trading using opposite CI Europe and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Europe 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 Europe Hedged and RBC Quant European 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.