Correlation Between RBC PHN and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both RBC PHN and IShares Canadian 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 PHN and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC PHN Short and iShares Canadian Universe, you can compare the effects of market volatilities on RBC PHN and IShares Canadian 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 PHN with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC PHN and IShares Canadian.
Diversification Opportunities for RBC PHN and IShares Canadian
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and IShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding RBC PHN Short and iShares Canadian Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Universe and RBC PHN 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 PHN Short are associated (or correlated) with IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Universe has no effect on the direction of RBC PHN i.e., RBC PHN and IShares Canadian go up and down completely randomly.
Pair Corralation between RBC PHN and IShares Canadian
Assuming the 90 days trading horizon RBC PHN is expected to generate 1.29 times less return on investment than IShares Canadian. But when comparing it to its historical volatility, RBC PHN Short is 2.36 times less risky than IShares Canadian. It trades about 0.17 of its potential returns per unit of risk. iShares Canadian Universe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,551 in iShares Canadian Universe on September 12, 2024 and sell it today you would earn a total of 322.00 from holding iShares Canadian Universe or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC PHN Short vs. iShares Canadian Universe
Performance |
| Timeline |
| RBC PHN Short |
| iShares Canadian Universe |
RBC PHN and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC PHN and IShares Canadian
The main advantage of trading using opposite RBC PHN and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC PHN position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| RBC PHN vs. iShares Canadian Universe | RBC PHN vs. iShares Canadian Real | RBC PHN vs. iShares Core Canadian | RBC PHN vs. iShares Core Canadian |
| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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