Correlation Between Global X and RBC Banks
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and RBC Banks 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 Banks Yield, you can compare the effects of market volatilities on Global X 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 Global X with a short position of RBC Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Banks.
Diversification Opportunities for Global X and RBC Banks
Very good diversification
The 3 months correlation between Global and RBC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active 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 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 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 Global X i.e., Global X and RBC Banks go up and down completely randomly.
Pair Corralation between Global X and RBC Banks
Assuming the 90 days trading horizon Global X is expected to generate 5.52 times less return on investment than RBC Banks. But when comparing it to its historical volatility, Global X Active is 3.74 times less risky than RBC Banks. It trades about 0.09 of its potential returns per unit of risk. RBC Banks Yield is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,694 in RBC Banks Yield on September 4, 2024 and sell it today you would earn a total of 987.00 from holding RBC Banks Yield or generate 58.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. RBC Banks Yield
Performance |
| Timeline |
| Global X Active |
| RBC Banks Yield |
Global X and RBC Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and RBC Banks
The main advantage of trading using opposite Global X and RBC Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.The idea behind Global X Active and RBC Banks Yield 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 Banks vs. RBC Banks Yield | RBC Banks vs. RBC Canadian Preferred | RBC Banks vs. RBC Quant Canadian | RBC Banks vs. RBC Quant Dividend |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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