Correlation Between RBC Discount and Kodiak Copper

Can any of the company-specific risk be diversified away by investing in both RBC Discount and Kodiak Copper 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 Kodiak Copper 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 Kodiak Copper Corp, you can compare the effects of market volatilities on RBC Discount and Kodiak Copper 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 Kodiak Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Discount and Kodiak Copper.

Diversification Opportunities for RBC Discount and Kodiak Copper

0.21

Correlation Coefficient

RBC Discount  Kodiak Copper

Modest diversification

The 3 months correlation between RBC and Kodiak is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and Kodiak Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Copper Corp 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 Kodiak Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Copper Corp has no effect on the direction of RBC Discount i.e., RBC Discount and Kodiak Copper go up and down completely randomly.

Pair Corralation between RBC Discount and Kodiak Copper

Assuming the 90 days trading horizon RBC Discount is expected to generate 28.76 times less return on investment than Kodiak Copper. But when comparing it to its historical volatility, RBC Discount Bond is 9.36 times less risky than Kodiak Copper. It trades about 0.05 of its potential returns per unit of risk. Kodiak Copper Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Kodiak Copper Corp on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Kodiak Copper Corp or generate 38.89% return on investment over 90 days.

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

RBC Discount Bond  vs.  Kodiak Copper Corp

RBC Discount Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Discount Bond are ranked lower than 3 (%) 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.

Kodiak Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kodiak Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Discount and Kodiak Copper

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

The idea behind RBC Discount Bond and Kodiak Copper Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.