Correlation Between Royal Bank and Cogeco

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

By analyzing existing cross correlation between Royal Bank of and Cogeco Inc, you can compare the effects of market volatilities on Royal Bank and Cogeco 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 Royal Bank with a short position of Cogeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Cogeco.

Diversification Opportunities for Royal Bank and Cogeco

0.03

Correlation Coefficient

Royal Bank  Cogeco

Significant diversification

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

Pair Corralation between Royal Bank and Cogeco

Assuming the 90 days trading horizon Royal Bank of is expected to under-perform the Cogeco. But the preferred stock apears to be less risky and, when comparing its historical volatility, Royal Bank of is 7.07 times less risky than Cogeco. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Cogeco Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,723  in Cogeco Inc on December 30, 2024 and sell it today you would earn a total of  457.00  from holding Cogeco Inc or generate 7.99% return on investment over 90 days.

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

Royal Bank of  vs.  Cogeco Inc

Royal Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Royal Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cogeco Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cogeco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Royal Bank and Cogeco

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

The idea behind Royal Bank of and Cogeco Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.