Correlation Between CI Canada and RBC Banks
Can any of the company-specific risk be diversified away by investing in both CI Canada and RBC Banks 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 CI Canada and RBC Banks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canada Lifeco and RBC Banks Yield, you can compare the effects of market volatilities on CI Canada and RBC Banks 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 CI Canada with a short position of RBC Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canada and RBC Banks.
Diversification Opportunities for CI Canada and RBC Banks
Very poor diversification
The 3 months correlation between FLI and RBC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CI Canada Lifeco and RBC Banks Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Banks Yield and CI Canada 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 CI Canada Lifeco are associated (or correlated) with RBC Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Banks Yield has no effect on the direction of CI Canada i.e., CI Canada and RBC Banks go up and down completely randomly.
Pair Corralation between CI Canada and RBC Banks
Assuming the 90 days trading horizon CI Canada is expected to generate 1.76 times less return on investment than RBC Banks. But when comparing it to its historical volatility, CI Canada Lifeco is 2.26 times less risky than RBC Banks. It trades about 0.32 of its potential returns per unit of risk. RBC Banks Yield is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,886 in RBC Banks Yield on September 3, 2024 and sell it today you would earn a total of 317.00 from holding RBC Banks Yield or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canada Lifeco vs. RBC Banks Yield
Performance |
| Timeline |
| CI Canada Lifeco |
| RBC Banks Yield |
CI Canada and RBC Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canada and RBC Banks
The main advantage of trading using opposite CI Canada and RBC Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canada position performs unexpectedly, RBC Banks 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 Banks will offset losses from the drop in RBC Banks' long position.| CI Canada vs. First Asset Energy | CI Canada vs. CI Gold Giants | CI Canada vs. Harvest Equal Weight | CI Canada vs. First Asset Tech |
| RBC Banks vs. RBC Banks Yield | RBC Banks vs. RBC Quant Dividend | RBC Banks vs. RBC Quant European | RBC Banks vs. RBC Short Term |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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