Correlation Between Royal Bank and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Arbor Metals 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 Arbor Metals 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 Arbor Metals Corp, you can compare the effects of market volatilities on Royal Bank and Arbor Metals 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 Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Arbor Metals.
Diversification Opportunities for Royal Bank and Arbor Metals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Arbor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp 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 Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Royal Bank i.e., Royal Bank and Arbor Metals go up and down completely randomly.
Pair Corralation between Royal Bank and Arbor Metals
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.12 times more return on investment than Arbor Metals. However, Royal Bank of is 8.68 times less risky than Arbor Metals. It trades about 0.09 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.22 per unit of risk. If you would invest 2,423 in Royal Bank of on August 27, 2024 and sell it today you would earn a total of 17.00 from holding Royal Bank of or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Arbor Metals Corp
Performance |
| Timeline |
| Royal Bank |
| Arbor Metals Corp |
Royal Bank and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Arbor Metals
The main advantage of trading using opposite Royal Bank and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Arbor Metals 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| Royal Bank vs. Forstrong Global Income | Royal Bank vs. BMO Aggregate Bond | Royal Bank vs. Terreno Resources Corp | Royal Bank vs. iShares Canadian HYBrid |
| Arbor Metals vs. First Majestic Silver | Arbor Metals vs. Ivanhoe Energy | Arbor Metals vs. Orezone Gold Corp | Arbor Metals vs. Faraday Copper 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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