Correlation Between Thermal Energy and RBC Discount

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

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

Diversification Opportunities for Thermal Energy and RBC Discount

-0.55

Correlation Coefficient

Thermal Energy  RBC Discount

Excellent diversification

The 3 months correlation between Thermal and RBC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond and Thermal Energy 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 Thermal Energy International are associated (or correlated) with RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of Thermal Energy i.e., Thermal Energy and RBC Discount go up and down completely randomly.

Pair Corralation between Thermal Energy and RBC Discount

Assuming the 90 days horizon Thermal Energy International is expected to under-perform the RBC Discount. In addition to that, Thermal Energy is 15.27 times more volatile than RBC Discount Bond. It trades about -0.07 of its total potential returns per unit of risk. RBC Discount Bond is currently generating about 0.05 per unit of volatility. If you would invest  2,194  in RBC Discount Bond on December 29, 2024 and sell it today you would earn a total of  28.00  from holding RBC Discount Bond or generate 1.28% return on investment over 90 days.

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

Thermal Energy International  vs.  RBC Discount Bond

Thermal Energy Inter

Risk-Adjusted Performance

Very Weak

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

RBC Discount Bond

Risk-Adjusted Performance

Insignificant

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.

Pair Trading with Thermal Energy and RBC Discount

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

The idea behind Thermal Energy International and RBC Discount Bond 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..