Correlation Between Global X and RBC Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and RBC Canadian 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 Global X and RBC Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Semiconductor and RBC Canadian Bank, you can compare the effects of market volatilities on Global X 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 Global X with a short position of RBC Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Canadian.
Diversification Opportunities for Global X and RBC Canadian
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and RBC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global X Semiconductor and RBC Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Canadian Bank and Global X 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 Global X Semiconductor 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 Bank has no effect on the direction of Global X i.e., Global X and RBC Canadian go up and down completely randomly.
Pair Corralation between Global X and RBC Canadian
Assuming the 90 days trading horizon Global X Semiconductor is expected to under-perform the RBC Canadian. In addition to that, Global X is 4.27 times more volatile than RBC Canadian Bank. It trades about -0.04 of its total potential returns per unit of risk. RBC Canadian Bank is currently generating about 0.43 per unit of volatility. If you would invest 2,781 in RBC Canadian Bank on September 13, 2024 and sell it today you would earn a total of 88.00 from holding RBC Canadian Bank or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X Semiconductor vs. RBC Canadian Bank
Performance |
| Timeline |
| Global X Semiconductor |
| RBC Canadian Bank |
Global X and RBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and RBC Canadian
The main advantage of trading using opposite Global X and RBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. First Trust AlphaDEX | Global X vs. FT AlphaDEX Industrials | Global X vs. BMO SPTSX Equal | Global X vs. First Trust Senior |
| RBC Canadian vs. iShares SPTSX Capped | RBC Canadian vs. iShares SPTSX Capped | RBC Canadian vs. iShares SPTSX Global | RBC Canadian vs. iShares SPTSX Capped |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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