Correlation Between RBC Quant and Global X

Can any of the company-specific risk be diversified away by investing in both RBC Quant and Global X 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 Global X 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 Global X Laddered, you can compare the effects of market volatilities on RBC Quant and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Global X.

Diversification Opportunities for RBC Quant and Global X

0.68

Correlation Coefficient

RBC Quant  Global X

Poor diversification

The 3 months correlation between RBC and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Canadian and Global X Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Laddered 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Laddered has no effect on the direction of RBC Quant i.e., RBC Quant and Global X go up and down completely randomly.

Pair Corralation between RBC Quant and Global X

Assuming the 90 days trading horizon RBC Quant Canadian is expected to generate 1.82 times more return on investment than Global X. However, RBC Quant is 1.82 times more volatile than Global X Laddered. It trades about 0.19 of its potential returns per unit of risk. Global X Laddered is currently generating about 0.21 per unit of risk. If you would invest  2,833  in RBC Quant Canadian on September 13, 2024 and sell it today you would earn a total of  184.00  from holding RBC Quant Canadian or generate 6.49% return on investment over 90 days.

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

RBC Quant Canadian  vs.  Global X Laddered

RBC Quant Canadian

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant Canadian are ranked lower than 15 (%) 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.

Global X Laddered

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Laddered are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X 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 Global X

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

The idea behind RBC Quant Canadian and Global X Laddered 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.