Correlation Between RBC Discount and Chibougamau Independent
Can any of the company-specific risk be diversified away by investing in both RBC Discount and Chibougamau Independent 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 Discount and Chibougamau Independent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Discount Bond and Chibougamau Independent Mines, you can compare the effects of market volatilities on RBC Discount and Chibougamau Independent 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 Discount with a short position of Chibougamau Independent. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Discount and Chibougamau Independent.
Diversification Opportunities for RBC Discount and Chibougamau Independent
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Chibougamau is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and Chibougamau Independent Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chibougamau Independent and RBC Discount 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 Discount Bond are associated (or correlated) with Chibougamau Independent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chibougamau Independent has no effect on the direction of RBC Discount i.e., RBC Discount and Chibougamau Independent go up and down completely randomly.
Pair Corralation between RBC Discount and Chibougamau Independent
Assuming the 90 days trading horizon RBC Discount is expected to generate 5.09 times less return on investment than Chibougamau Independent. But when comparing it to its historical volatility, RBC Discount Bond is 16.42 times less risky than Chibougamau Independent. It trades about 0.09 of its potential returns per unit of risk. Chibougamau Independent Mines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Chibougamau Independent Mines on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Chibougamau Independent Mines or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.35% |
| Values | Daily Returns |
RBC Discount Bond vs. Chibougamau Independent Mines
Performance |
| Timeline |
| RBC Discount Bond |
| Chibougamau Independent |
RBC Discount and Chibougamau Independent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Discount and Chibougamau Independent
The main advantage of trading using opposite RBC Discount and Chibougamau Independent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Discount position performs unexpectedly, Chibougamau Independent 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 Chibougamau Independent will offset losses from the drop in Chibougamau Independent's long position.| RBC Discount vs. RBC Target 2029 | RBC Discount vs. RBC Quant Dividend | RBC Discount vs. RBC Quant EAFE | RBC Discount 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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