Correlation Between Rbc Bluebay and Dana Large

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

By analyzing existing cross correlation between Rbc Bluebay Absolute and Dana Large Cap, you can compare the effects of market volatilities on Rbc Bluebay and Dana Large 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 Rbc Bluebay with a short position of Dana Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Bluebay and Dana Large.

Diversification Opportunities for Rbc Bluebay and Dana Large

-0.1

Correlation Coefficient

Rbc Bluebay  Dana Large

Good diversification

The 3 months correlation between Rbc and Dana is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Bluebay Absolute and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap and Rbc Bluebay 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 Rbc Bluebay Absolute are associated (or correlated) with Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Rbc Bluebay i.e., Rbc Bluebay and Dana Large go up and down completely randomly.

Pair Corralation between Rbc Bluebay and Dana Large

Assuming the 90 days horizon Rbc Bluebay Absolute is expected to generate 0.45 times more return on investment than Dana Large. However, Rbc Bluebay Absolute is 2.22 times less risky than Dana Large. It trades about -0.11 of its potential returns per unit of risk. Dana Large Cap is currently generating about -0.24 per unit of risk. If you would invest  891.00  in Rbc Bluebay Absolute on October 3, 2024 and sell it today you would lose (41.00) from holding Rbc Bluebay Absolute or give up 4.6% of portfolio value over 90 days.

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

Rbc Bluebay Absolute  vs.  Dana Large Cap

Rbc Bluebay Absolute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Bluebay Absolute has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dana Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Rbc Bluebay and Dana Large

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

The idea behind Rbc Bluebay Absolute and Dana Large Cap 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.