Correlation Between Bank of America and RBC Canadian
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By analyzing existing cross correlation between Bank of America and RBC Canadian Equity, you can compare the effects of market volatilities on Bank of America and RBC Canadian 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 Bank of America with a short position of RBC Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and RBC Canadian.
Diversification Opportunities for Bank of America and RBC Canadian
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and RBC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and RBC Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Canadian Equity and Bank of America 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 Bank of America are associated (or correlated) with RBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Canadian Equity has no effect on the direction of Bank of America i.e., Bank of America and RBC Canadian go up and down completely randomly.
Pair Corralation between Bank of America and RBC Canadian
Considering the 90-day investment horizon Bank of America is expected to generate 3.18 times more return on investment than RBC Canadian. However, Bank of America is 3.18 times more volatile than RBC Canadian Equity. It trades about 0.22 of its potential returns per unit of risk. RBC Canadian Equity is currently generating about 0.11 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. RBC Canadian Equity
Performance |
| Timeline |
| Bank of America |
| RBC Canadian Equity |
Bank of America and RBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and RBC Canadian
The main advantage of trading using opposite Bank of America and RBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, RBC Canadian 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 Canadian will offset losses from the drop in RBC Canadian's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| RBC Canadian vs. PHN Canadian Equity | RBC Canadian vs. BMO Aggregate Bond | RBC Canadian vs. iShares Canadian HYBrid | RBC Canadian vs. Brompton European Dividend |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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