Correlation Between E L and RBC Discount
Can any of the company-specific risk be diversified away by investing in both E L and RBC Discount 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 E L and RBC Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial Corp and RBC Discount Bond, you can compare the effects of market volatilities on E L and RBC Discount 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 E L with a short position of RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and RBC Discount.
Diversification Opportunities for E L and RBC Discount
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF and RBC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond and E L 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 E L Financial Corp are associated (or correlated) with RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of E L i.e., E L and RBC Discount go up and down completely randomly.
Pair Corralation between E L and RBC Discount
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 3.2 times more return on investment than RBC Discount. However, E L is 3.2 times more volatile than RBC Discount Bond. It trades about 0.04 of its potential returns per unit of risk. RBC Discount Bond is currently generating about -0.09 per unit of risk. If you would invest 1,686 in E L Financial Corp on November 7, 2025 and sell it today you would earn a total of 40.00 from holding E L Financial Corp or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. RBC Discount Bond
Performance |
| Timeline |
| E L Financial |
| RBC Discount Bond |
E L and RBC Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and RBC Discount
The main advantage of trading using opposite E L and RBC Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, RBC Discount 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 Discount will offset losses from the drop in RBC Discount's long position.The idea behind E L Financial Corp and RBC Discount Bond 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.| RBC Discount vs. RBC Target 2029 | RBC Discount vs. RBC Quant Dividend | RBC Discount vs. RBC Quant EAFE | RBC Discount vs. RBC Quant European |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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