Correlation Between RBC Discount and Grande Portage

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

By analyzing existing cross correlation between RBC Discount Bond and Grande Portage Resources, you can compare the effects of market volatilities on RBC Discount and Grande Portage 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 Discount with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Discount and Grande Portage.

Diversification Opportunities for RBC Discount and Grande Portage

-0.72

Correlation Coefficient

RBC Discount  Grande Portage

Pay attention - limited upside

The 3 months correlation between RBC and Grande is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources and RBC Discount 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 Discount Bond are associated (or correlated) with Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of RBC Discount i.e., RBC Discount and Grande Portage go up and down completely randomly.

Pair Corralation between RBC Discount and Grande Portage

Assuming the 90 days trading horizon RBC Discount is expected to generate 20.31 times less return on investment than Grande Portage. But when comparing it to its historical volatility, RBC Discount Bond is 12.17 times less risky than Grande Portage. It trades about 0.09 of its potential returns per unit of risk. Grande Portage Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Grande Portage Resources on October 20, 2024 and sell it today you would earn a total of  2.00  from holding Grande Portage Resources or generate 11.11% return on investment over 90 days.

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

RBC Discount Bond  vs.  Grande Portage Resources

RBC Discount Bond

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Discount Bond are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Discount is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with RBC Discount and Grande Portage

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

The idea behind RBC Discount Bond and Grande Portage Resources 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.