Correlation Between Rbc Emerging and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Rbc Emerging and Nasdaq-100(r) 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 Emerging and Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rbc Emerging Markets and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Rbc Emerging and Nasdaq-100(r) 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 Emerging with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Emerging and Nasdaq-100(r).

Diversification Opportunities for Rbc Emerging and Nasdaq-100(r)

-0.46

Correlation Coefficient

Rbc Emerging  Nasdaq-100(r)

Very good diversification

The 3 months correlation between Rbc and Nasdaq-100(r) is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Emerging Markets and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Rbc Emerging 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 Emerging Markets are associated (or correlated) with Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Rbc Emerging i.e., Rbc Emerging and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Rbc Emerging and Nasdaq-100(r)

Assuming the 90 days horizon Rbc Emerging is expected to generate 36.9 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Rbc Emerging Markets is 2.37 times less risky than Nasdaq-100(r). It trades about 0.01 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  20,978  in Nasdaq 100 2x Strategy on October 4, 2024 and sell it today you would earn a total of  34,060  from holding Nasdaq 100 2x Strategy or generate 162.36% return on investment over 90 days.

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

Rbc Emerging Markets  vs.  Nasdaq 100 2x Strategy

Rbc Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Emerging Markets 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.

Nasdaq 100 2x

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rbc Emerging and Nasdaq-100(r)

The main advantage of trading using opposite Rbc Emerging and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Emerging position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Rbc Emerging Markets and Nasdaq 100 2x Strategy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.