Correlation Between RBC Canadian and Lysander Slater
Can any of the company-specific risk be diversified away by investing in both RBC Canadian and Lysander Slater 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 Lysander Slater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Canadian Preferred and Lysander Slater Preferred Share, you can compare the effects of market volatilities on RBC Canadian and Lysander Slater 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 Lysander Slater. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and Lysander Slater.
Diversification Opportunities for RBC Canadian and Lysander Slater
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Lysander is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Preferred and Lysander Slater Preferred Shar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lysander Slater Pref 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 Preferred are associated (or correlated) with Lysander Slater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lysander Slater Pref has no effect on the direction of RBC Canadian i.e., RBC Canadian and Lysander Slater go up and down completely randomly.
Pair Corralation between RBC Canadian and Lysander Slater
Assuming the 90 days trading horizon RBC Canadian Preferred is expected to generate 1.26 times more return on investment than Lysander Slater. However, RBC Canadian is 1.26 times more volatile than Lysander Slater Preferred Share. It trades about 0.1 of its potential returns per unit of risk. Lysander Slater Preferred Share is currently generating about 0.11 per unit of risk. If you would invest 1,980 in RBC Canadian Preferred on September 1, 2024 and sell it today you would earn a total of 142.00 from holding RBC Canadian Preferred or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Canadian Preferred vs. Lysander Slater Preferred Shar
Performance |
| Timeline |
| RBC Canadian Preferred |
| Lysander Slater Pref |
RBC Canadian and Lysander Slater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Canadian and Lysander Slater
The main advantage of trading using opposite RBC Canadian and Lysander Slater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Canadian position performs unexpectedly, Lysander Slater 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 Lysander Slater will offset losses from the drop in Lysander Slater's long position.| RBC Canadian vs. Global X Active | RBC Canadian vs. BMO Laddered Preferred | RBC Canadian vs. RBC Canadian Bank | RBC Canadian vs. iShares SPTSX Canadian |
| Lysander Slater vs. BMO Covered Call | Lysander Slater vs. Forstrong Global Income | Lysander Slater vs. BMO Aggregate Bond | Lysander Slater vs. iShares Canadian HYBrid |
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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