Correlation Between RBC Discount and Standard Uranium

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

Diversification Opportunities for RBC Discount and Standard Uranium

-0.74

Correlation Coefficient

RBC Discount  Standard Uranium

Pay attention - limited upside

The 3 months correlation between RBC and Standard is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and Standard Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Uranium 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 Standard Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Uranium has no effect on the direction of RBC Discount i.e., RBC Discount and Standard Uranium go up and down completely randomly.

Pair Corralation between RBC Discount and Standard Uranium

Assuming the 90 days trading horizon RBC Discount is expected to generate 15.23 times less return on investment than Standard Uranium. But when comparing it to its historical volatility, RBC Discount Bond is 26.38 times less risky than Standard Uranium. It trades about 0.13 of its potential returns per unit of risk. Standard Uranium is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Standard Uranium on October 12, 2024 and sell it today you would earn a total of  0.50  from holding Standard Uranium or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

RBC Discount Bond  vs.  Standard Uranium

RBC Discount Bond

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Discount Bond are ranked lower than 13 (%) 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.

Standard Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Standard Uranium is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with RBC Discount and Standard Uranium

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

The idea behind RBC Discount Bond and Standard Uranium 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.