Correlation Between RBC Discount and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both RBC Discount 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 Discount 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 Discount Bond and iShares Canadian HYBrid, you can compare the effects of market volatilities on RBC Discount 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 Discount with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Discount and IShares Canadian.
Diversification Opportunities for RBC Discount and IShares Canadian
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding RBC Discount Bond and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid 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 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 HYBrid has no effect on the direction of RBC Discount i.e., RBC Discount and IShares Canadian go up and down completely randomly.
Pair Corralation between RBC Discount and IShares Canadian
Assuming the 90 days trading horizon RBC Discount Bond is expected to generate 1.87 times more return on investment than IShares Canadian. However, RBC Discount is 1.87 times more volatile than iShares Canadian HYBrid. It trades about 0.04 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.01 per unit of risk. If you would invest 2,121 in RBC Discount Bond on August 25, 2024 and sell it today you would earn a total of 9.00 from holding RBC Discount Bond or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
RBC Discount Bond vs. iShares Canadian HYBrid
Performance |
| Timeline |
| RBC Discount Bond |
| iShares Canadian HYBrid |
RBC Discount and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Discount and IShares Canadian
The main advantage of trading using opposite RBC Discount and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Discount 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 Discount vs. Franklin Global Aggregate | RBC Discount vs. CI Enhanced Government | RBC Discount vs. PIMCO Global Short | RBC Discount vs. CIBC Core Plus |
| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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