Correlation Between Quantitative and Rbc China

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

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

Diversification Opportunities for Quantitative and Rbc China

-0.08

Correlation Coefficient

Quantitative  Rbc China

Good diversification

The 3 months correlation between Quantitative and Rbc is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative Longshort Equity 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 Quantitative 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 Quantitative Longshort Equity 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 Quantitative i.e., Quantitative and Rbc China go up and down completely randomly.

Pair Corralation between Quantitative and Rbc China

Assuming the 90 days horizon Quantitative Longshort Equity is expected to under-perform the Rbc China. But the mutual fund apears to be less risky and, when comparing its historical volatility, Quantitative Longshort Equity is 4.35 times less risky than Rbc China. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Rbc China Equity is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  928.00  in Rbc China Equity on December 11, 2024 and sell it today you would earn a total of  98.00  from holding Rbc China Equity or generate 10.56% return on investment over 90 days.

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

Quantitative Longshort Equity  vs.  Rbc China Equity

Quantitative Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantitative Longshort Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Rbc China Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc China Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rbc China showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantitative and Rbc China

The main advantage of trading using opposite Quantitative and Rbc China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantitative 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 Quantitative Longshort Equity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.