Correlation Between BetaPro SPTSX and RBC Banks
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX 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 BetaPro SPTSX and RBC Banks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SPTSX 60 and RBC Banks Yield, you can compare the effects of market volatilities on BetaPro SPTSX 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 BetaPro SPTSX with a short position of RBC Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and RBC Banks.
Diversification Opportunities for BetaPro SPTSX and RBC Banks
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and RBC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 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 BetaPro SPTSX 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 SPTSX 60 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 BetaPro SPTSX i.e., BetaPro SPTSX and RBC Banks go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and RBC Banks
Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to generate 1.27 times more return on investment than RBC Banks. However, BetaPro SPTSX is 1.27 times more volatile than RBC Banks Yield. It trades about 0.22 of its potential returns per unit of risk. RBC Banks Yield is currently generating about -0.26 per unit of risk. If you would invest 2,155 in BetaPro SPTSX 60 on December 1, 2024 and sell it today you would earn a total of 126.00 from holding BetaPro SPTSX 60 or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SPTSX 60 vs. RBC Banks Yield
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| RBC Banks Yield |
BetaPro SPTSX and RBC Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and RBC Banks
The main advantage of trading using opposite BetaPro SPTSX and RBC Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX 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.| BetaPro SPTSX vs. BetaPro SPTSX 60 | BetaPro SPTSX vs. BetaPro Equal Weight | BetaPro SPTSX vs. BetaPro Gold Bullion | BetaPro SPTSX vs. BetaPro SP 500 |
| RBC Banks vs. RBC Banks Yield | RBC Banks vs. RBC Quant Dividend | RBC Banks vs. RBC Quant European | RBC Banks vs. RBC Short Term |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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