Correlation Between Royal Bank and Cogeco
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Cogeco 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 Cogeco 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 Cogeco Inc, you can compare the effects of market volatilities on Royal Bank and Cogeco 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 Cogeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Cogeco.
Diversification Opportunities for Royal Bank and Cogeco
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Cogeco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Cogeco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Inc 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 Cogeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Inc has no effect on the direction of Royal Bank i.e., Royal Bank and Cogeco go up and down completely randomly.
Pair Corralation between Royal Bank and Cogeco
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.65 times more return on investment than Cogeco. However, Royal Bank of is 1.53 times less risky than Cogeco. It trades about 0.07 of its potential returns per unit of risk. Cogeco Inc is currently generating about 0.03 per unit of risk. If you would invest 1,698 in Royal Bank of on September 2, 2024 and sell it today you would earn a total of 733.00 from holding Royal Bank of or generate 43.17% 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. Cogeco Inc
Performance |
| Timeline |
| Royal Bank |
| Cogeco Inc |
Royal Bank and Cogeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Cogeco
The main advantage of trading using opposite Royal Bank and Cogeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Cogeco 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 Cogeco will offset losses from the drop in Cogeco's long position.| Royal Bank vs. Element Fleet Management | Royal Bank vs. DRI Healthcare Trust | Royal Bank vs. Wilmington Capital Management | Royal Bank vs. NeuPath Health |
| Cogeco vs. Cogeco Communications | Cogeco vs. Quebecor | Cogeco vs. Transcontinental | Cogeco vs. Stella Jones |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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