Correlation Between Rbc Microcap and Siit Large

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

By analyzing existing cross correlation between Rbc Microcap Value and Siit Large Cap, you can compare the effects of market volatilities on Rbc Microcap and Siit Large 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 Microcap with a short position of Siit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Microcap and Siit Large.

Diversification Opportunities for Rbc Microcap and Siit Large

0.83

Correlation Coefficient

Rbc Microcap  Siit Large

Very poor diversification

The 3 months correlation between Rbc and Siit is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Microcap Value and Siit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Large Cap and Rbc Microcap 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 Microcap Value are associated (or correlated) with Siit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Large Cap has no effect on the direction of Rbc Microcap i.e., Rbc Microcap and Siit Large go up and down completely randomly.

Pair Corralation between Rbc Microcap and Siit Large

Assuming the 90 days horizon Rbc Microcap Value is expected to under-perform the Siit Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rbc Microcap Value is 1.29 times less risky than Siit Large. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Siit Large Cap is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,730  in Siit Large Cap on October 11, 2024 and sell it today you would lose (190.00) from holding Siit Large Cap or give up 10.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

Rbc Microcap Value  vs.  Siit Large Cap

Rbc Microcap Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Microcap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rbc Microcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Siit Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siit Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Rbc Microcap and Siit Large

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

The idea behind Rbc Microcap Value and Siit Large Cap 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.

Check out your portfolio center.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.