Correlation Between BetaPro NASDAQ and RBC Quant
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and RBC Quant 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 BetaPro NASDAQ and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro NASDAQ 100 2x and RBC Quant European, you can compare the effects of market volatilities on BetaPro NASDAQ and RBC Quant 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 BetaPro NASDAQ with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and RBC Quant.
Diversification Opportunities for BetaPro NASDAQ and RBC Quant
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and RBC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and RBC Quant European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant European and BetaPro NASDAQ 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 BetaPro NASDAQ 100 2x are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant European has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and RBC Quant go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and RBC Quant
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 3.16 times more return on investment than RBC Quant. However, BetaPro NASDAQ is 3.16 times more volatile than RBC Quant European. It trades about 0.1 of its potential returns per unit of risk. RBC Quant European is currently generating about -0.12 per unit of risk. If you would invest 2,244 in BetaPro NASDAQ 100 2x on August 25, 2024 and sell it today you would earn a total of 103.00 from holding BetaPro NASDAQ 100 2x or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. RBC Quant European
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| RBC Quant European |
BetaPro NASDAQ and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and RBC Quant
The main advantage of trading using opposite BetaPro NASDAQ and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, RBC Quant 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 Quant will offset losses from the drop in RBC Quant's long position.| BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro NASDAQ 100 2x | BetaPro NASDAQ vs. BetaPro SP TSX | BetaPro NASDAQ vs. BetaPro SP 500 |
| RBC Quant vs. BMO Europe High | RBC Quant vs. BMO High Dividend | RBC Quant vs. BMO Covered Call | RBC Quant vs. BMO Premium Yield |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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