Correlation Between Sun Peak and Royal Bank

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

By analyzing existing cross correlation between Sun Peak Metals and Royal Bank of, you can compare the effects of market volatilities on Sun Peak and Royal Bank 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 Sun Peak with a short position of Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Peak and Royal Bank.

Diversification Opportunities for Sun Peak and Royal Bank

-0.14

Correlation Coefficient

Sun Peak  Royal Bank

Good diversification

The 3 months correlation between Sun and Royal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank and Sun Peak 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 Sun Peak Metals are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Sun Peak i.e., Sun Peak and Royal Bank go up and down completely randomly.

Pair Corralation between Sun Peak and Royal Bank

Assuming the 90 days trading horizon Sun Peak Metals is expected to under-perform the Royal Bank. In addition to that, Sun Peak is 12.87 times more volatile than Royal Bank of. It trades about -0.02 of its total potential returns per unit of risk. Royal Bank of is currently generating about -0.01 per unit of volatility. If you would invest  2,474  in Royal Bank of on December 20, 2024 and sell it today you would lose (9.00) from holding Royal Bank of or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Sun Peak Metals  vs.  Royal Bank of

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Royal Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Royal Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sun Peak and Royal Bank

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

The idea behind Sun Peak Metals and Royal Bank of 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.