Correlation Between Royal Bank and Celestica
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Celestica 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 Celestica 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 Celestica, you can compare the effects of market volatilities on Royal Bank and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Celestica.
Diversification Opportunities for Royal Bank and Celestica
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Royal and Celestica is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Royal Bank i.e., Royal Bank and Celestica go up and down completely randomly.
Pair Corralation between Royal Bank and Celestica
Assuming the 90 days trading horizon Royal Bank is expected to generate 105.03 times less return on investment than Celestica. But when comparing it to its historical volatility, Royal Bank of is 19.71 times less risky than Celestica. It trades about 0.03 of its potential returns per unit of risk. Celestica is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 12,570 in Celestica on November 28, 2024 and sell it today you would earn a total of 2,612 from holding Celestica or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Celestica
Performance |
| Timeline |
| Royal Bank |
| Celestica |
Royal Bank and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Celestica
The main advantage of trading using opposite Royal Bank and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| Royal Bank vs. Canso Credit Trust | Royal Bank vs. Titanium Transportation Group | Royal Bank vs. TGS Esports | Royal Bank vs. Chemtrade Logistics Income |
| Celestica vs. Descartes Systems Group | Celestica vs. CAE Inc | Celestica vs. CGI Inc | Celestica vs. Cogeco Communications |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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