Correlation Between High Liner and Royal Bank
Can any of the company-specific risk be diversified away by investing in both High Liner and Royal Bank 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 High Liner and Royal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Royal Bank of, you can compare the effects of market volatilities on High Liner and Royal Bank 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 High Liner with a short position of Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Royal Bank.
Diversification Opportunities for High Liner and Royal Bank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High and Royal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank and High Liner 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 High Liner Foods are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of High Liner i.e., High Liner and Royal Bank go up and down completely randomly.
Pair Corralation between High Liner and Royal Bank
Assuming the 90 days trading horizon High Liner Foods is expected to generate 3.51 times more return on investment than Royal Bank. However, High Liner is 3.51 times more volatile than Royal Bank of. It trades about 0.01 of its potential returns per unit of risk. Royal Bank of is currently generating about -0.07 per unit of risk. If you would invest 1,600 in High Liner Foods on November 5, 2024 and sell it today you would earn a total of 0.00 from holding High Liner Foods or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Royal Bank of
Performance |
| Timeline |
| High Liner Foods |
| Royal Bank |
High Liner and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Royal Bank
The main advantage of trading using opposite High Liner and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Royal Bank 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 Royal Bank will offset losses from the drop in Royal Bank's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Royal Bank vs. Element Fleet Management | Royal Bank vs. Champion Gaming Group | Royal Bank vs. Champion Iron | Royal Bank vs. Network Media Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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