Correlation Between Financials Ultrasector and Rbc Funds

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

By analyzing existing cross correlation between Financials Ultrasector Profund and Rbc Funds Trust, you can compare the effects of market volatilities on Financials Ultrasector and Rbc Funds 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 Financials Ultrasector with a short position of Rbc Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Rbc Funds.

Diversification Opportunities for Financials Ultrasector and Rbc Funds

-0.6

Correlation Coefficient

Financials Ultrasector  Rbc Funds

Excellent diversification

The 3 months correlation between Financials and Rbc is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Rbc Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Funds Trust and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Rbc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Funds Trust has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Rbc Funds go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Rbc Funds

Assuming the 90 days horizon Financials Ultrasector Profund is expected to under-perform the Rbc Funds. In addition to that, Financials Ultrasector is 1.21 times more volatile than Rbc Funds Trust. It trades about -0.26 of its total potential returns per unit of risk. Rbc Funds Trust is currently generating about -0.3 per unit of volatility. If you would invest  849.00  in Rbc Funds Trust on October 4, 2024 and sell it today you would lose (66.00) from holding Rbc Funds Trust or give up 7.77% of portfolio value over 90 days.

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

Financials Ultrasector Profund  vs.  Rbc Funds Trust

Financials Ultrasector

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Financials Ultrasector may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Rbc Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Funds Trust 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 basic 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 Financials Ultrasector and Rbc Funds

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

The idea behind Financials Ultrasector Profund and Rbc Funds Trust 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.