Correlation Between RBC Vision and Global Healthcare

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

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

Diversification Opportunities for RBC Vision and Global Healthcare

-0.83

Correlation Coefficient

RBC Vision  Global Healthcare

Pay attention - limited upside

The 3 months correlation between RBC and Global is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding RBC Vision Global and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income and RBC Vision 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 Vision Global are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of RBC Vision i.e., RBC Vision and Global Healthcare go up and down completely randomly.

Pair Corralation between RBC Vision and Global Healthcare

Assuming the 90 days trading horizon RBC Vision Global is expected to generate 0.55 times more return on investment than Global Healthcare. However, RBC Vision Global is 1.81 times less risky than Global Healthcare. It trades about 0.16 of its potential returns per unit of risk. Global Healthcare Income is currently generating about 0.02 per unit of risk. If you would invest  2,163  in RBC Vision Global on September 21, 2024 and sell it today you would earn a total of  732.00  from holding RBC Vision Global or generate 33.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	85.13%
Values	Daily Returns

RBC Vision Global  vs.  Global Healthcare Income

RBC Vision Global

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Vision Global are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, RBC Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Pair Trading with RBC Vision and Global Healthcare

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

The idea behind RBC Vision Global and Global Healthcare Income 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.