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 NASDAQ 100 and RBC Quant European, 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
Excellent diversification
The 3 months correlation between Global and RBC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ 100 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 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 NASDAQ 100 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 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 NASDAQ 100 is expected to generate 1.63 times more return on investment than RBC Quant. However, Global X is 1.63 times more volatile than RBC Quant European. It trades about 0.12 of its potential returns per unit of risk. RBC Quant European is currently generating about 0.08 per unit of risk. If you would invest 4,487 in Global X NASDAQ 100 on August 29, 2024 and sell it today you would earn a total of 3,936 from holding Global X NASDAQ 100 or generate 87.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X NASDAQ 100 vs. RBC Quant European
Performance |
| Timeline |
| Global X NASDAQ |
| RBC Quant European |
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. Global X SP | Global X vs. iShares SPTSX Capped | Global X vs. iShares NASDAQ 100 | Global X vs. Global X SPTSX |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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