Correlation Between RBC PHN and RBC Quant

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

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

Diversification Opportunities for RBC PHN and RBC Quant

0.03

Correlation Coefficient

RBC PHN  RBC Quant

Significant diversification

The 3 months correlation between RBC and RBC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding RBC PHN Short and RBC Quant EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant EAFE and RBC PHN 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 PHN Short are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant EAFE has no effect on the direction of RBC PHN i.e., RBC PHN and RBC Quant go up and down completely randomly.

Pair Corralation between RBC PHN and RBC Quant

Assuming the 90 days trading horizon RBC PHN Short is expected to generate 0.22 times more return on investment than RBC Quant. However, RBC PHN Short is 4.54 times less risky than RBC Quant. It trades about 0.09 of its potential returns per unit of risk. RBC Quant EAFE is currently generating about -0.05 per unit of risk. If you would invest  1,975  in RBC PHN Short on September 3, 2024 and sell it today you would earn a total of  17.00  from holding RBC PHN Short or generate 0.86% return on investment over 90 days.

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

RBC PHN Short  vs.  RBC Quant EAFE

RBC PHN Short

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC PHN Short are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC PHN is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

RBC Quant EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Quant EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, RBC Quant 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 PHN and RBC Quant

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

The idea behind RBC PHN Short and RBC Quant EAFE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.