Correlation Between RBC Discount and Equity Metals
Can any of the company-specific risk be diversified away by investing in both RBC Discount and Equity Metals 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 Equity Metals 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 Equity Metals Corp, you can compare the effects of market volatilities on RBC Discount and Equity Metals 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 Equity Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Discount and Equity Metals.
Diversification Opportunities for RBC Discount and Equity Metals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RBC and Equity is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and Equity Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals Corp 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 Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals Corp has no effect on the direction of RBC Discount i.e., RBC Discount and Equity Metals go up and down completely randomly.
Pair Corralation between RBC Discount and Equity Metals
Assuming the 90 days trading horizon RBC Discount is expected to generate 8.95 times less return on investment than Equity Metals. But when comparing it to its historical volatility, RBC Discount Bond is 22.02 times less risky than Equity Metals. It trades about 0.09 of its potential returns per unit of risk. Equity Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Equity Metals Corp on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Equity Metals Corp or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.38% |
| Values | Daily Returns |
RBC Discount Bond vs. Equity Metals Corp
Performance |
| Timeline |
| RBC Discount Bond |
| Equity Metals Corp |
RBC Discount and Equity Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Discount and Equity Metals
The main advantage of trading using opposite RBC Discount and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Discount position performs unexpectedly, Equity Metals 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 Equity Metals will offset losses from the drop in Equity Metals' long position.| RBC Discount vs. Mackenzie Core Plus | RBC Discount vs. Mackenzie Floating Rate | RBC Discount vs. Mackenzie Unconstrained Bond | RBC Discount vs. Mackenzie Canadian Short |
| Equity Metals vs. iShares Canadian HYBrid | Equity Metals vs. Altagas Cum Red | Equity Metals vs. European Residential Real | Equity Metals vs. RBC Discount Bond |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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