Correlation Between Global X and RBC Quant

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Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Big and RBC Quant European, you can compare the effects of market volatilities on Global X 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 Global X with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Quant.

Diversification Opportunities for Global X and RBC Quant

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Global and RBC is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global X Big 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 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 Big 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 Global X i.e., Global X and RBC Quant go up and down completely randomly.

Pair Corralation between Global X and RBC Quant

Assuming the 90 days trading horizon Global X Big is expected to generate 2.73 times more return on investment than RBC Quant. However, Global X is 2.73 times more volatile than RBC Quant European. It trades about 0.21 of its potential returns per unit of risk. RBC Quant European is currently generating about -0.08 per unit of risk. If you would invest  2,557  in Global X Big on September 3, 2024 and sell it today you would earn a total of  813.00  from holding Global X Big or generate 31.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Global X Big  vs.  RBC Quant European

 Performance 
       Timeline  
Global X Big 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Big are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.
RBC Quant European 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fundamental indicators, RBC Quant is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X and RBC Quant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and RBC Quant

The main advantage of trading using opposite Global X and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Big 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.
Check out your portfolio center.
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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