Correlation Between Royal Bank and Winpak
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Winpak 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 Winpak 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 Winpak, you can compare the effects of market volatilities on Royal Bank and Winpak 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 Winpak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Winpak.
Diversification Opportunities for Royal Bank and Winpak
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Winpak is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Royal Bank i.e., Royal Bank and Winpak go up and down completely randomly.
Pair Corralation between Royal Bank and Winpak
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.18 times more return on investment than Winpak. However, Royal Bank of is 5.59 times less risky than Winpak. It trades about 0.21 of its potential returns per unit of risk. Winpak is currently generating about -0.09 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Winpak
Performance |
| Timeline |
| Royal Bank |
| Winpak |
Royal Bank and Winpak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Winpak
The main advantage of trading using opposite Royal Bank and Winpak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Winpak 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 Winpak will offset losses from the drop in Winpak's 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 |
| Winpak vs. Olympia Financial Group | Winpak vs. Royal Bank of | Winpak vs. Western Investment | Winpak vs. Economic Investment Trust |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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