Correlation Between Royal Bank and Mullen
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Mullen 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 Mullen 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 Mullen Group, you can compare the effects of market volatilities on Royal Bank and Mullen 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 Mullen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Mullen.
Diversification Opportunities for Royal Bank and Mullen
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Mullen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group 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 Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Royal Bank i.e., Royal Bank and Mullen go up and down completely randomly.
Pair Corralation between Royal Bank and Mullen
Assuming the 90 days trading horizon Royal Bank is expected to generate 1.47 times less return on investment than Mullen. But when comparing it to its historical volatility, Royal Bank of is 2.26 times less risky than Mullen. It trades about 0.23 of its potential returns per unit of risk. Mullen Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,503 in Mullen Group on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Mullen Group or generate 2.66% 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. Mullen Group
Performance |
| Timeline |
| Royal Bank |
| Mullen Group |
Royal Bank and Mullen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Mullen
The main advantage of trading using opposite Royal Bank and Mullen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Mullen 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 Mullen will offset losses from the drop in Mullen's long position.| Royal Bank vs. Manulife Financial Corp | Royal Bank vs. Lion One Metals | Royal Bank vs. Intact Financial Corp | Royal Bank vs. Toronto Dominion Bank |
| Mullen vs. Pason Systems | Mullen vs. Westshore Terminals Investment | Mullen vs. Superior Plus Corp | Mullen vs. Gibson Energy |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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