Correlation Between Royal Canadian and Global Crossing
Can any of the company-specific risk be diversified away by investing in both Royal Canadian and Global Crossing 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 Royal Canadian and Global Crossing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Canadian Mint and Global Crossing Airlines, you can compare the effects of market volatilities on Royal Canadian and Global Crossing 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 Royal Canadian with a short position of Global Crossing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Canadian and Global Crossing.
Diversification Opportunities for Royal Canadian and Global Crossing
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Royal Canadian Mint and Global Crossing Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Crossing Airlines and Royal Canadian 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 Royal Canadian Mint are associated (or correlated) with Global Crossing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Crossing Airlines has no effect on the direction of Royal Canadian i.e., Royal Canadian and Global Crossing go up and down completely randomly.
Pair Corralation between Royal Canadian and Global Crossing
Assuming the 90 days trading horizon Royal Canadian is expected to generate 2.17 times less return on investment than Global Crossing. But when comparing it to its historical volatility, Royal Canadian Mint is 6.15 times less risky than Global Crossing. It trades about 0.1 of its potential returns per unit of risk. Global Crossing Airlines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Global Crossing Airlines on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Global Crossing Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Canadian Mint vs. Global Crossing Airlines
Performance |
| Timeline |
| Royal Canadian Mint |
| Global Crossing Airlines |
Royal Canadian and Global Crossing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Canadian and Global Crossing
The main advantage of trading using opposite Royal Canadian and Global Crossing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Canadian position performs unexpectedly, Global Crossing 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 Global Crossing will offset losses from the drop in Global Crossing's long position.| Royal Canadian vs. iShares Gold Bullion | Royal Canadian vs. Sprott Physical Gold | Royal Canadian vs. iShares Gold Bullion |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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