Correlation Between Global X and RBC Short

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

By analyzing existing cross correlation between Global X Active and RBC Short Term, you can compare the effects of market volatilities on Global X and RBC Short 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 Global X with a short position of RBC Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Short.

Diversification Opportunities for Global X and RBC Short

0.51

Correlation Coefficient

Global X  RBC Short

Very weak diversification

The 3 months correlation between Global and RBC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and RBC Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Short Term and Global X 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 Global X Active are associated (or correlated) with RBC Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Short Term has no effect on the direction of Global X i.e., Global X and RBC Short go up and down completely randomly.

Pair Corralation between Global X and RBC Short

Assuming the 90 days trading horizon Global X Active is expected to generate 0.86 times more return on investment than RBC Short. However, Global X Active is 1.16 times less risky than RBC Short. It trades about 0.08 of its potential returns per unit of risk. RBC Short Term is currently generating about 0.03 per unit of risk. If you would invest  1,019  in Global X Active on December 29, 2024 and sell it today you would earn a total of  19.00  from holding Global X Active or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Global X Active  vs.  RBC Short Term

Global X Active

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

RBC Short Term

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Short Term are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Short is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and RBC Short

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

The idea behind Global X Active and RBC Short Term 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.