Correlation Between RBC Quant and IShares ESG
Can any of the company-specific risk be diversified away by investing in both RBC Quant and IShares ESG 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 IShares ESG 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 iShares ESG Aware, you can compare the effects of market volatilities on RBC Quant and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and IShares ESG.
Diversification Opportunities for RBC Quant and IShares ESG
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RBC and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Emerging and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of RBC Quant i.e., RBC Quant and IShares ESG go up and down completely randomly.
Pair Corralation between RBC Quant and IShares ESG
Assuming the 90 days trading horizon RBC Quant Emerging is expected to generate 0.93 times more return on investment than IShares ESG. However, RBC Quant Emerging is 1.07 times less risky than IShares ESG. It trades about -0.11 of its potential returns per unit of risk. iShares ESG Aware is currently generating about -0.15 per unit of risk. If you would invest 2,143 in RBC Quant Emerging on August 26, 2024 and sell it today you would lose (42.00) from holding RBC Quant Emerging or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Quant Emerging vs. iShares ESG Aware
Performance |
| Timeline |
| RBC Quant Emerging |
| iShares ESG Aware |
RBC Quant and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Quant and IShares ESG
The main advantage of trading using opposite RBC Quant and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG'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 |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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