Correlation Between Royal Bank and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Globex Mining 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 Globex Mining 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 Globex Mining Enterprises, you can compare the effects of market volatilities on Royal Bank and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Globex Mining.
Diversification Opportunities for Royal Bank and Globex Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Globex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Royal Bank i.e., Royal Bank and Globex Mining go up and down completely randomly.
Pair Corralation between Royal Bank and Globex Mining
Assuming the 90 days trading horizon Royal Bank is expected to generate 12.6 times less return on investment than Globex Mining. But when comparing it to its historical volatility, Royal Bank of is 7.12 times less risky than Globex Mining. It trades about 0.1 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 102.00 in Globex Mining Enterprises on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Globex Mining Enterprises or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Globex Mining Enterprises
Performance |
| Timeline |
| Royal Bank |
| Globex Mining Enterprises |
Royal Bank and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Globex Mining
The main advantage of trading using opposite Royal Bank and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Royal Bank vs. Fairfax Financial Holdings | Royal Bank vs. iShares Canadian HYBrid | Royal Bank vs. Brompton European Dividend | Royal Bank vs. Solar Alliance Energy |
| Globex Mining vs. Chibougamau Independent Mines | Globex Mining vs. Entree Resources | Globex Mining vs. Solitario Exploration Royalty | Globex Mining vs. Forsys Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |