Correlation Between RBC Canadian and Dow Jones
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By analyzing existing cross correlation between RBC Canadian Equity and Dow Jones Industrial, you can compare the effects of market volatilities on RBC Canadian and Dow Jones 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 Canadian with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and Dow Jones.
Diversification Opportunities for RBC Canadian and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBC and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and RBC Canadian 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 Canadian Equity are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of RBC Canadian i.e., RBC Canadian and Dow Jones go up and down completely randomly.
Pair Corralation between RBC Canadian and Dow Jones
Assuming the 90 days trading horizon RBC Canadian is expected to generate 2.85 times less return on investment than Dow Jones. But when comparing it to its historical volatility, RBC Canadian Equity is 1.49 times less risky than Dow Jones. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
RBC Canadian Equity vs. Dow Jones Industrial
Performance |
| Timeline |
RBC Canadian and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
RBC Canadian Equity
Pair trading matchups for RBC Canadian
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with RBC Canadian and Dow Jones
The main advantage of trading using opposite RBC Canadian and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Canadian position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| RBC Canadian vs. PHN Canadian Equity | RBC Canadian vs. BMO Aggregate Bond | RBC Canadian vs. iShares Canadian HYBrid | RBC Canadian vs. Brompton European Dividend |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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