Correlation Between RBC Quant and TD Active
Can any of the company-specific risk be diversified away by investing in both RBC Quant and TD Active 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 Quant and TD Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Quant Canadian and TD Active Preferred, you can compare the effects of market volatilities on RBC Quant and TD Active 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 Quant with a short position of TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and TD Active.
Diversification Opportunities for RBC Quant and TD Active
Very weak diversification
The 3 months correlation between RBC and TPRF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Canadian and TD Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Preferred and RBC Quant 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 Quant Canadian are associated (or correlated) with TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Preferred has no effect on the direction of RBC Quant i.e., RBC Quant and TD Active go up and down completely randomly.
Pair Corralation between RBC Quant and TD Active
Assuming the 90 days trading horizon RBC Quant is expected to generate 1.77 times less return on investment than TD Active. In addition to that, RBC Quant is 1.85 times more volatile than TD Active Preferred. It trades about 0.17 of its total potential returns per unit of risk. TD Active Preferred is currently generating about 0.56 per unit of volatility. If you would invest 1,066 in TD Active Preferred on September 13, 2024 and sell it today you would earn a total of 37.00 from holding TD Active Preferred or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Quant Canadian vs. TD Active Preferred
Performance |
| Timeline |
| RBC Quant Canadian |
| TD Active Preferred |
RBC Quant and TD Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Quant and TD Active
The main advantage of trading using opposite RBC Quant and TD Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, TD Active 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 TD Active will offset losses from the drop in TD Active's long position.| RBC Quant vs. RBC Quant Dividend | RBC Quant vs. RBC Quant EAFE | RBC Quant vs. Invesco Canadian Dividend | RBC Quant vs. RBC Canadian Preferred |
| TD Active vs. TD Q Canadian | TD Active vs. TD Active Global | TD Active vs. TD Q Global | TD Active vs. TD Canadian Equity |
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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