Correlation Between Purpose Cash and RBC Quant
Can any of the company-specific risk be diversified away by investing in both Purpose Cash 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 Purpose Cash and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purpose Cash Management and RBC Quant European, you can compare the effects of market volatilities on Purpose Cash 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 Purpose Cash with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Cash and RBC Quant.
Diversification Opportunities for Purpose Cash and RBC Quant
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Purpose and RBC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Cash Management 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 Purpose Cash 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 Purpose Cash Management 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 Purpose Cash i.e., Purpose Cash and RBC Quant go up and down completely randomly.
Pair Corralation between Purpose Cash and RBC Quant
Assuming the 90 days trading horizon Purpose Cash is expected to generate 2.93 times less return on investment than RBC Quant. But when comparing it to its historical volatility, Purpose Cash Management is 36.79 times less risky than RBC Quant. It trades about 0.98 of its potential returns per unit of risk. RBC Quant European is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,037 in RBC Quant European on November 2, 2024 and sell it today you would earn a total of 603.00 from holding RBC Quant European or generate 29.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Purpose Cash Management vs. RBC Quant European
Performance |
| Timeline |
| Purpose Cash Management |
| RBC Quant European |
Purpose Cash and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Purpose Cash and RBC Quant
The main advantage of trading using opposite Purpose Cash and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Cash 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.| Purpose Cash vs. Purpose High Interest | Purpose Cash vs. CI High Interest | Purpose Cash vs. BMO Mid Term IG |
| RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant Dividend | RBC Quant vs. RBC Quant Emerging | RBC Quant vs. RBC Quant Canadian |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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