Correlation Between Global X and RBC Quant
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Emerging and RBC Quant Emerging, you can compare the effects of market volatilities on Global X 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 Global X with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and RBC Quant.
Diversification Opportunities for Global X and RBC Quant
Almost no diversification
The 3 months correlation between Global and RBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X Emerging and RBC Quant Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Emerging 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 Emerging 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 Emerging has no effect on the direction of Global X i.e., Global X and RBC Quant go up and down completely randomly.
Pair Corralation between Global X and RBC Quant
Assuming the 90 days trading horizon Global X is expected to generate 1.09 times less return on investment than RBC Quant. In addition to that, Global X is 1.07 times more volatile than RBC Quant Emerging. It trades about 0.07 of its total potential returns per unit of risk. RBC Quant Emerging is currently generating about 0.08 per unit of volatility. If you would invest 1,798 in RBC Quant Emerging on August 25, 2024 and sell it today you would earn a total of 303.00 from holding RBC Quant Emerging or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Emerging vs. RBC Quant Emerging
Performance |
| Timeline |
| Global X Emerging |
| RBC Quant Emerging |
Global X and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and RBC Quant
The main advantage of trading using opposite Global X and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. iShares MSCI Min | Global X vs. iShares MSCI Min | Global X vs. iShares Floating Rate | Global X vs. BMO Aggregate Bond |
| RBC Quant vs. iShares MSCI Min | RBC Quant vs. iShares MSCI Min | RBC Quant vs. iShares Floating Rate | RBC Quant 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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