Correlation Between RBC Quant and Global X
Can any of the company-specific risk be diversified away by investing in both RBC Quant and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Quant Emerging and Global X Emerging, you can compare the effects of market volatilities on RBC Quant and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Global X.
Diversification Opportunities for RBC Quant and Global X
Almost no diversification
The 3 months correlation between RBC and Global is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Emerging and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging 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 Emerging are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Emerging has no effect on the direction of RBC Quant i.e., RBC Quant and Global X go up and down completely randomly.
Pair Corralation between RBC Quant and Global X
Assuming the 90 days trading horizon RBC Quant Emerging is expected to generate 0.92 times more return on investment than Global X. However, RBC Quant Emerging is 1.09 times less risky than Global X. It trades about -0.04 of its potential returns per unit of risk. Global X Emerging is currently generating about -0.14 per unit of risk. If you would invest 2,103 in RBC Quant Emerging on September 1, 2024 and sell it today you would lose (13.00) from holding RBC Quant Emerging or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
RBC Quant Emerging vs. Global X Emerging
Performance |
| Timeline |
| RBC Quant Emerging |
| Global X Emerging |
RBC Quant and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Quant and Global X
The main advantage of trading using opposite RBC Quant and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| RBC Quant vs. RBC Quant European | RBC Quant vs. RBC Quant Canadian | RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant Dividend |
| Global X vs. Vanguard FTSE Developed | Global X vs. Vanguard Total Market | Global X vs. Vanguard FTSE Canada | Global X vs. Vanguard Canadian Aggregate |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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