Correlation Between NV Gold and RBC Discount

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

By analyzing existing cross correlation between NV Gold Corp and RBC Discount Bond, you can compare the effects of market volatilities on NV Gold and RBC Discount 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 NV Gold with a short position of RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Gold and RBC Discount.

Diversification Opportunities for NV Gold and RBC Discount

-0.53

Correlation Coefficient

NV Gold  RBC Discount

Excellent diversification

The 3 months correlation between NVX and RBC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NV Gold Corp and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond and NV Gold 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 NV Gold Corp are associated (or correlated) with RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of NV Gold i.e., NV Gold and RBC Discount go up and down completely randomly.

Pair Corralation between NV Gold and RBC Discount

Assuming the 90 days horizon NV Gold Corp is expected to under-perform the RBC Discount. In addition to that, NV Gold is 14.96 times more volatile than RBC Discount Bond. It trades about -0.01 of its total potential returns per unit of risk. RBC Discount Bond is currently generating about 0.05 per unit of volatility. If you would invest  2,188  in RBC Discount Bond on December 20, 2024 and sell it today you would earn a total of  26.00  from holding RBC Discount Bond or generate 1.19% return on investment over 90 days.

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

NV Gold Corp  vs.  RBC Discount Bond

NV Gold Corp

Risk-Adjusted Performance

Weak

Over the last 90 days NV Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NV Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

RBC Discount Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Discount Bond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Discount is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NV Gold and RBC Discount

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

The idea behind NV Gold Corp and RBC Discount Bond 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.