Correlation Between CI Canadian and RBC Banks
Can any of the company-specific risk be diversified away by investing in both CI Canadian 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 CI Canadian and RBC Banks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canadian REIT and RBC Banks Yield, you can compare the effects of market volatilities on CI Canadian 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 CI Canadian with a short position of RBC Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and RBC Banks.
Diversification Opportunities for CI Canadian and RBC Banks
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RIT and RBC is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian REIT 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 CI 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 CI Canadian REIT 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 CI Canadian i.e., CI Canadian and RBC Banks go up and down completely randomly.
Pair Corralation between CI Canadian and RBC Banks
Assuming the 90 days trading horizon CI Canadian is expected to generate 4.24 times less return on investment than RBC Banks. But when comparing it to its historical volatility, CI Canadian REIT is 2.12 times less risky than RBC Banks. It trades about 0.01 of its potential returns per unit of risk. RBC Banks Yield is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,852 in RBC Banks Yield on September 1, 2024 and sell it today you would earn a total of 351.00 from holding RBC Banks Yield or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canadian REIT vs. RBC Banks Yield
Performance |
| Timeline |
| CI Canadian REIT |
| RBC Banks Yield |
CI Canadian and RBC Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canadian and RBC Banks
The main advantage of trading using opposite CI Canadian and RBC Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canadian 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.| CI Canadian vs. BMO Equal Weight | CI Canadian vs. Vanguard FTSE Canadian | CI Canadian vs. iShares SPTSX Capped | CI Canadian vs. BMO Equal Weight |
| RBC Banks vs. BMO Canadian Dividend | RBC Banks vs. BMO Covered Call | RBC Banks vs. BMO Canadian High | RBC Banks vs. BMO NASDAQ 100 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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