Correlation Between RBC Quant and Invesco Canadian

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

By analyzing existing cross correlation between RBC Quant EAFE and Invesco Canadian Dividend, you can compare the effects of market volatilities on RBC Quant and Invesco Canadian 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 Invesco Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Invesco Canadian.

Diversification Opportunities for RBC Quant and Invesco Canadian

0.1

Correlation Coefficient

RBC Quant  Invesco Canadian

Average diversification

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

Pair Corralation between RBC Quant and Invesco Canadian

Assuming the 90 days trading horizon RBC Quant EAFE is expected to generate 1.24 times more return on investment than Invesco Canadian. However, RBC Quant is 1.24 times more volatile than Invesco Canadian Dividend. It trades about 0.2 of its potential returns per unit of risk. Invesco Canadian Dividend is currently generating about -0.06 per unit of risk. If you would invest  2,634  in RBC Quant EAFE on December 2, 2024 and sell it today you would earn a total of  202.00  from holding RBC Quant EAFE or generate 7.67% return on investment over 90 days.

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

RBC Quant EAFE  vs.  Invesco Canadian Dividend

RBC Quant EAFE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant EAFE 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 April 2025.

Invesco Canadian Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Canadian Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Invesco Canadian 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 Invesco Canadian

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

The idea behind RBC Quant EAFE and Invesco Canadian Dividend 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.