Correlation Between Mackenzie International and RBC Banks
Can any of the company-specific risk be diversified away by investing in both Mackenzie International 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 Mackenzie International and RBC Banks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie International Equity and RBC Banks Yield, you can compare the effects of market volatilities on Mackenzie International 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 Mackenzie International with a short position of RBC Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie International and RBC Banks.
Diversification Opportunities for Mackenzie International and RBC Banks
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mackenzie and RBC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie International Equity 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 Mackenzie International 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 Mackenzie International Equity 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 Mackenzie International i.e., Mackenzie International and RBC Banks go up and down completely randomly.
Pair Corralation between Mackenzie International and RBC Banks
Assuming the 90 days trading horizon Mackenzie International Equity is expected to under-perform the RBC Banks. But the etf apears to be less risky and, when comparing its historical volatility, Mackenzie International Equity is 4.44 times less risky than RBC Banks. The etf trades about -0.15 of its potential returns per unit of risk. The RBC Banks Yield is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,292 in RBC Banks Yield on August 29, 2024 and sell it today you would earn a total of 422.00 from holding RBC Banks Yield or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie International Equity vs. RBC Banks Yield
Performance |
| Timeline |
| Mackenzie International |
| RBC Banks Yield |
Mackenzie International and RBC Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie International and RBC Banks
The main advantage of trading using opposite Mackenzie International and RBC Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie International 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.| Mackenzie International vs. Vanguard FTSE Developed | Mackenzie International vs. BMO MSCI EAFE | Mackenzie International vs. BMO Low Volatility |
| RBC Banks vs. Brompton Global Dividend | RBC Banks vs. Tech Leaders Income | RBC Banks vs. Global Healthcare Income | RBC Banks vs. Brompton European Dividend |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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