Correlation Between CI Global and RBC Canadian
Can any of the company-specific risk be diversified away by investing in both CI Global 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 CI Global and RBC Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Global Financial and RBC Canadian Bank, you can compare the effects of market volatilities on CI Global 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 CI Global with a short position of RBC Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Global and RBC Canadian.
Diversification Opportunities for CI Global and RBC Canadian
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FSF and RBC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Financial 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 CI Global 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 Global Financial 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 CI Global i.e., CI Global and RBC Canadian go up and down completely randomly.
Pair Corralation between CI Global and RBC Canadian
Assuming the 90 days trading horizon CI Global Financial is expected to generate 2.0 times more return on investment than RBC Canadian. However, CI Global is 2.0 times more volatile than RBC Canadian Bank. It trades about 0.41 of its potential returns per unit of risk. RBC Canadian Bank is currently generating about 0.62 per unit of risk. If you would invest 2,916 in CI Global Financial on September 3, 2024 and sell it today you would earn a total of 197.00 from holding CI Global Financial or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Global Financial vs. RBC Canadian Bank
Performance |
| Timeline |
| CI Global Financial |
| RBC Canadian Bank |
CI Global and RBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Global and RBC Canadian
The main advantage of trading using opposite CI Global and RBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Global 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.| CI Global vs. CI Preferred Share | CI Global vs. First Asset Morningstar | CI Global vs. CI Short Term | CI Global vs. CI Investment Grade |
| RBC Canadian vs. BMO SPTSX Equal | RBC Canadian vs. BMO Covered Call | RBC Canadian vs. Vanguard FTSE Canadian | RBC Canadian vs. RBC Canadian Preferred |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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