Correlation Between Rbc Small and Siit Emerging

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

By analyzing existing cross correlation between Rbc Small Cap and Siit Emerging Markets, you can compare the effects of market volatilities on Rbc Small and Siit Emerging 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 Small with a short position of Siit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Small and Siit Emerging.

Diversification Opportunities for Rbc Small and Siit Emerging

0.16

Correlation Coefficient

Rbc Small  Siit Emerging

Average diversification

The 3 months correlation between Rbc and Siit is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Small Cap and Siit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Emerging Markets and Rbc Small 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 Small Cap are associated (or correlated) with Siit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Emerging Markets has no effect on the direction of Rbc Small i.e., Rbc Small and Siit Emerging go up and down completely randomly.

Pair Corralation between Rbc Small and Siit Emerging

Assuming the 90 days horizon Rbc Small Cap is expected to under-perform the Siit Emerging. In addition to that, Rbc Small is 1.02 times more volatile than Siit Emerging Markets. It trades about -0.22 of its total potential returns per unit of risk. Siit Emerging Markets is currently generating about 0.03 per unit of volatility. If you would invest  967.00  in Siit Emerging Markets on December 17, 2024 and sell it today you would earn a total of  13.00  from holding Siit Emerging Markets or generate 1.34% return on investment over 90 days.

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

Rbc Small Cap  vs.  Siit Emerging Markets

Rbc Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rbc Small Cap 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Siit Emerging Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Siit Emerging 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 Small and Siit Emerging

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

The idea behind Rbc Small Cap and Siit Emerging Markets 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..