Correlation Between Royal Bank and Cineplex
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Cineplex 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 Cineplex 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 Cineplex, you can compare the effects of market volatilities on Royal Bank and Cineplex 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 Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Cineplex.
Diversification Opportunities for Royal Bank and Cineplex
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Royal and Cineplex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex 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 Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Royal Bank i.e., Royal Bank and Cineplex go up and down completely randomly.
Pair Corralation between Royal Bank and Cineplex
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.13 times more return on investment than Cineplex. However, Royal Bank of is 7.49 times less risky than Cineplex. It trades about 0.01 of its potential returns per unit of risk. Cineplex is currently generating about -0.05 per unit of risk. If you would invest 2,448 in Royal Bank of on November 27, 2024 and sell it today you would earn a total of 2.00 from holding Royal Bank of or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Cineplex
Performance |
| Timeline |
| Royal Bank |
| Cineplex |
Royal Bank and Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Cineplex
The main advantage of trading using opposite Royal Bank and Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Cineplex 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 Cineplex will offset losses from the drop in Cineplex's long position.| Royal Bank vs. Pace Metals | Royal Bank vs. CVW CleanTech | Royal Bank vs. Black Mammoth Metals | Royal Bank vs. Precious Metals And |
| Cineplex vs. Air Canada | Cineplex vs. BlackBerry | Cineplex vs. Suncor Energy | Cineplex vs. Drone Delivery Canada |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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