Correlation Between Vanguard FTSE and RBC Quant

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

By analyzing existing cross correlation between Vanguard FTSE Developed and RBC Quant Dividend, you can compare the effects of market volatilities on Vanguard FTSE and RBC Quant 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 Vanguard FTSE with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and RBC Quant.

Diversification Opportunities for Vanguard FTSE and RBC Quant

0.26

Correlation Coefficient

Vanguard FTSE  RBC Quant

Modest diversification

The 3 months correlation between Vanguard and RBC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and RBC Quant Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Dividend and Vanguard FTSE 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 Vanguard FTSE Developed are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant Dividend has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and RBC Quant go up and down completely randomly.

Pair Corralation between Vanguard FTSE and RBC Quant

Assuming the 90 days horizon Vanguard FTSE is expected to generate 1.25 times less return on investment than RBC Quant. But when comparing it to its historical volatility, Vanguard FTSE Developed is 1.28 times less risky than RBC Quant. It trades about 0.07 of its potential returns per unit of risk. RBC Quant Dividend is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,902  in RBC Quant Dividend on October 10, 2024 and sell it today you would earn a total of  644.00  from holding RBC Quant Dividend or generate 33.86% return on investment over 90 days.

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

Vanguard FTSE Developed  vs.  RBC Quant Dividend

Vanguard FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

RBC Quant Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Quant Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Vanguard FTSE and RBC Quant

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

The idea behind Vanguard FTSE Developed and RBC Quant Dividend 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.