Correlation Between Small Cap and Rbc Funds

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

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

Diversification Opportunities for Small Cap and Rbc Funds

-0.71

Correlation Coefficient

Small Cap  Rbc Funds

Pay attention - limited upside

The 3 months correlation between Small and Rbc is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Rbc Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Funds Trust and Small Cap 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 Small Cap Stock are associated (or correlated) with Rbc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Funds Trust has no effect on the direction of Small Cap i.e., Small Cap and Rbc Funds go up and down completely randomly.

Pair Corralation between Small Cap and Rbc Funds

Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Rbc Funds. In addition to that, Small Cap is 1.12 times more volatile than Rbc Funds Trust. It trades about -0.1 of its total potential returns per unit of risk. Rbc Funds Trust is currently generating about 0.15 per unit of volatility. If you would invest  784.00  in Rbc Funds Trust on December 28, 2024 and sell it today you would earn a total of  74.00  from holding Rbc Funds Trust or generate 9.44% return on investment over 90 days.

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

Small Cap Stock  vs.  Rbc Funds Trust

Small Cap Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Cap Stock 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.

Rbc Funds Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Funds Trust are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Small Cap and Rbc Funds

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

The idea behind Small Cap Stock and Rbc Funds Trust 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.