Correlation Between AGF Management and Royal Bank
Can any of the company-specific risk be diversified away by investing in both AGF Management and Royal Bank 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 AGF Management and Royal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Royal Bank of, you can compare the effects of market volatilities on AGF Management and Royal Bank 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 AGF Management with a short position of Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Royal Bank.
Diversification Opportunities for AGF Management and Royal Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGF and Royal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank and AGF Management 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 AGF Management Limited are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of AGF Management i.e., AGF Management and Royal Bank go up and down completely randomly.
Pair Corralation between AGF Management and Royal Bank
Assuming the 90 days trading horizon AGF Management Limited is expected to generate 1.57 times more return on investment than Royal Bank. However, AGF Management is 1.57 times more volatile than Royal Bank of. It trades about 0.08 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.07 per unit of risk. If you would invest 592.00 in AGF Management Limited on August 26, 2024 and sell it today you would earn a total of 482.00 from holding AGF Management Limited or generate 81.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Royal Bank of
Performance |
| Timeline |
| AGF Management |
| Royal Bank |
AGF Management and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Royal Bank
The main advantage of trading using opposite AGF Management and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, Royal Bank 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 Royal Bank will offset losses from the drop in Royal Bank's long position.| AGF Management vs. NVIDIA CDR | AGF Management vs. Apple Inc CDR | AGF Management vs. Microsoft Corp CDR | AGF Management vs. Amazon CDR |
| Royal Bank vs. AGF Management Limited | Royal Bank vs. Primaris Retail RE | Royal Bank vs. WELL Health Technologies | Royal Bank vs. Reliq Health Technologies |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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