Correlation Between Royal Bank and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Superior Plus 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 Royal Bank and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Superior Plus Corp, you can compare the effects of market volatilities on Royal Bank and Superior Plus 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 Royal Bank with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Superior Plus.
Diversification Opportunities for Royal Bank and Superior Plus
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Royal and Superior is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Royal Bank 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 Royal Bank of are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Royal Bank i.e., Royal Bank and Superior Plus go up and down completely randomly.
Pair Corralation between Royal Bank and Superior Plus
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.05 times more return on investment than Superior Plus. However, Royal Bank of is 18.19 times less risky than Superior Plus. It trades about 0.21 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.01 per unit of risk. If you would invest 2,430 in Royal Bank of on August 31, 2024 and sell it today you would earn a total of 31.00 from holding Royal Bank of or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Superior Plus Corp
Performance |
| Timeline |
| Royal Bank |
| Superior Plus Corp |
Royal Bank and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Superior Plus
The main advantage of trading using opposite Royal Bank and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Royal Bank vs. Fairfax Financial Holdings | Royal Bank vs. Fairfax Financial Holdings | Royal Bank vs. iShares Canadian HYBrid | Royal Bank vs. Brompton European Dividend |
| Superior Plus vs. Gibson Energy | Superior Plus vs. Parkland Fuel | Superior Plus vs. Mullen Group | Superior Plus vs. Keyera Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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