Correlation Between Global Healthcare and RBC Global

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

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

Diversification Opportunities for Global Healthcare and RBC Global

-0.46

Correlation Coefficient

Global Healthcare  RBC Global

Very good diversification

The 3 months correlation between Global and RBC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Global Healthcare Income and RBC Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Global Technology and Global Healthcare 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 Healthcare Income are associated (or correlated) with RBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Global Technology has no effect on the direction of Global Healthcare i.e., Global Healthcare and RBC Global go up and down completely randomly.

Pair Corralation between Global Healthcare and RBC Global

Assuming the 90 days trading horizon Global Healthcare Income is expected to generate 0.49 times more return on investment than RBC Global. However, Global Healthcare Income is 2.04 times less risky than RBC Global. It trades about 0.19 of its potential returns per unit of risk. RBC Global Technology is currently generating about -0.1 per unit of risk. If you would invest  747.00  in Global Healthcare Income on December 29, 2024 and sell it today you would earn a total of  61.00  from holding Global Healthcare Income or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Global Healthcare Income  vs.  RBC Global Technology

Global Healthcare Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Healthcare Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

RBC Global Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Global Technology has generated negative risk-adjusted returns adding no value to fund investors. Despite latest unfluctuating 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.

Pair Trading with Global Healthcare and RBC Global

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

The idea behind Global Healthcare Income and RBC Global Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.