Correlation Between RBC Quant and RBC Short
Can any of the company-specific risk be diversified away by investing in both RBC Quant and RBC Short 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 RBC Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Quant Dividend and RBC Short Term, you can compare the effects of market volatilities on RBC Quant and RBC Short 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 RBC Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and RBC Short.
Diversification Opportunities for RBC Quant and RBC Short
Very poor diversification
The 3 months correlation between RBC and RBC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Dividend and RBC Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Short Term 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 Dividend are associated (or correlated) with RBC Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Short Term has no effect on the direction of RBC Quant i.e., RBC Quant and RBC Short go up and down completely randomly.
Pair Corralation between RBC Quant and RBC Short
Assuming the 90 days trading horizon RBC Quant Dividend is expected to generate 71.32 times more return on investment than RBC Short. However, RBC Quant is 71.32 times more volatile than RBC Short Term. It trades about 0.06 of its potential returns per unit of risk. RBC Short Term is currently generating about 0.18 per unit of risk. If you would invest 2,168 in RBC Quant Dividend on August 25, 2024 and sell it today you would earn a total of 383.00 from holding RBC Quant Dividend or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Quant Dividend vs. RBC Short Term
Performance |
| Timeline |
| RBC Quant Dividend |
| RBC Short Term |
RBC Quant and RBC Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Quant and RBC Short
The main advantage of trading using opposite RBC Quant and RBC Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, RBC Short 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 Short will offset losses from the drop in RBC Short's long position.| RBC Quant vs. BMO Europe High | RBC Quant vs. BMO Covered Call | RBC Quant vs. BMO Covered Call | RBC Quant vs. BMO Europe High |
| RBC Short vs. RBC Target 2029 | RBC Short vs. RBC Quant Dividend | RBC Short vs. RBC Quant EAFE | RBC Short vs. RBC Quant European |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Correlations Find global opportunities by holding instruments from different markets |