Correlation Between RBC Quant and BMO Dividend
Can any of the company-specific risk be diversified away by investing in both RBC Quant and BMO Dividend 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 BMO Dividend 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 BMO Dividend CAD, you can compare the effects of market volatilities on RBC Quant and BMO Dividend 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 BMO Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and BMO Dividend.
Diversification Opportunities for RBC Quant and BMO Dividend
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBC and BMO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Dividend and BMO Dividend CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Dividend CAD 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 BMO Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Dividend CAD has no effect on the direction of RBC Quant i.e., RBC Quant and BMO Dividend go up and down completely randomly.
Pair Corralation between RBC Quant and BMO Dividend
Assuming the 90 days trading horizon RBC Quant Dividend is expected to generate 1.21 times more return on investment than BMO Dividend. However, RBC Quant is 1.21 times more volatile than BMO Dividend CAD. It trades about 0.34 of its potential returns per unit of risk. BMO Dividend CAD is currently generating about 0.27 per unit of risk. If you would invest 2,435 in RBC Quant Dividend on September 1, 2024 and sell it today you would earn a total of 163.00 from holding RBC Quant Dividend or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
RBC Quant Dividend vs. BMO Dividend CAD
Performance |
| Timeline |
| RBC Quant Dividend |
| BMO Dividend CAD |
RBC Quant and BMO Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Quant and BMO Dividend
The main advantage of trading using opposite RBC Quant and BMO Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, BMO Dividend 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 BMO Dividend will offset losses from the drop in BMO Dividend's long position.| RBC Quant vs. RBC Quant Canadian | RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant European | RBC Quant vs. BMO Dividend ETF |
| BMO Dividend vs. Vanguard Dividend Appreciation | BMO Dividend vs. Vanguard Total Market | BMO Dividend vs. Vanguard FTSE Emerging | BMO Dividend vs. Vanguard FTSE Global |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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