Correlation Between RBC Quant and Evolve Active

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

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

Diversification Opportunities for RBC Quant and Evolve Active

0.52

Correlation Coefficient

RBC Quant  Evolve Active

Very weak diversification

The 3 months correlation between RBC and Evolve is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Canadian and Evolve Active Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Active Canadian and RBC Quant 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 Quant Canadian are associated (or correlated) with Evolve Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Active Canadian has no effect on the direction of RBC Quant i.e., RBC Quant and Evolve Active go up and down completely randomly.

Pair Corralation between RBC Quant and Evolve Active

Assuming the 90 days trading horizon RBC Quant Canadian is expected to generate 2.65 times more return on investment than Evolve Active. However, RBC Quant is 2.65 times more volatile than Evolve Active Canadian. It trades about 0.3 of its potential returns per unit of risk. Evolve Active Canadian is currently generating about 0.3 per unit of risk. If you would invest  2,898  in RBC Quant Canadian on September 4, 2024 and sell it today you would earn a total of  112.00  from holding RBC Quant Canadian or generate 3.86% return on investment over 90 days.

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

RBC Quant Canadian  vs.  Evolve Active Canadian

RBC Quant Canadian

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant Canadian are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, RBC Quant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evolve Active Canadian

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Active Canadian are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Evolve Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Quant and Evolve Active

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

The idea behind RBC Quant Canadian and Evolve Active Canadian 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..