Correlation Between Global X and RBC Target
Can any of the company-specific risk be diversified away by investing in both Global X and RBC Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and RBC Target 2027, you can compare the effects of market volatilities on Global X and RBC Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Target.
Diversification Opportunities for Global X and RBC Target
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and RBC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and RBC Target 2027 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Target 2027 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 Active are associated (or correlated) with RBC Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Target 2027 has no effect on the direction of Global X i.e., Global X and RBC Target go up and down completely randomly.
Pair Corralation between Global X and RBC Target
Assuming the 90 days trading horizon Global X Active is expected to generate 3.01 times more return on investment than RBC Target. However, Global X is 3.01 times more volatile than RBC Target 2027. It trades about 0.15 of its potential returns per unit of risk. RBC Target 2027 is currently generating about 0.04 per unit of risk. If you would invest 1,010 in Global X Active on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Global X Active or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. RBC Target 2027
Performance |
| Timeline |
| Global X Active |
| RBC Target 2027 |
Global X and RBC Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and RBC Target
The main advantage of trading using opposite Global X and RBC Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, RBC Target 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 Target will offset losses from the drop in RBC Target's long position.| Global X vs. Franklin Global Aggregate | Global X vs. Franklin Large Cap | Global X vs. First Trust Senior | Global X vs. BMO Aggregate Bond |
| RBC Target vs. Franklin Global Aggregate | RBC Target vs. Franklin Large Cap | RBC Target vs. First Trust Senior | RBC Target vs. BMO Aggregate Bond |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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