Correlation Between RBC Canadian and Global X
Can any of the company-specific risk be diversified away by investing in both RBC Canadian and Global X 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 RBC Canadian and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Canadian Bank and Global X Active, you can compare the effects of market volatilities on RBC Canadian and Global X 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 RBC Canadian with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and Global X.
Diversification Opportunities for RBC Canadian and Global X
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RBC and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Bank and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and RBC 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 RBC Canadian Bank are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Active has no effect on the direction of RBC Canadian i.e., RBC Canadian and Global X go up and down completely randomly.
Pair Corralation between RBC Canadian and Global X
Assuming the 90 days trading horizon RBC Canadian Bank is expected to generate 1.55 times more return on investment than Global X. However, RBC Canadian is 1.55 times more volatile than Global X Active. It trades about 0.15 of its potential returns per unit of risk. Global X Active is currently generating about 0.14 per unit of risk. If you would invest 2,420 in RBC Canadian Bank on September 3, 2024 and sell it today you would earn a total of 436.00 from holding RBC Canadian Bank or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Canadian Bank vs. Global X Active
Performance |
| Timeline |
| RBC Canadian Bank |
| Global X Active |
RBC Canadian and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Canadian and Global X
The main advantage of trading using opposite RBC Canadian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Canadian position performs unexpectedly, Global X 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 X will offset losses from the drop in Global X's long position.| RBC Canadian vs. BMO SPTSX Equal | RBC Canadian vs. BMO Covered Call | RBC Canadian vs. Vanguard FTSE Canadian | RBC Canadian vs. RBC Canadian Preferred |
| Global X vs. BMO Laddered Preferred | Global X vs. iShares SPTSX Canadian | Global X 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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