Correlation Between Royal Bank and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Royal Bank and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Restaurant Brands.
Diversification Opportunities for Royal Bank and Restaurant Brands
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Royal and Restaurant is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Royal Bank i.e., Royal Bank and Restaurant Brands go up and down completely randomly.
Pair Corralation between Royal Bank and Restaurant Brands
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.81 times more return on investment than Restaurant Brands. However, Royal Bank of is 1.23 times less risky than Restaurant Brands. It trades about 0.05 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.03 per unit of risk. If you would invest 1,935 in Royal Bank of on September 26, 2024 and sell it today you would earn a total of 505.00 from holding Royal Bank of or generate 26.1% 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. Restaurant Brands Internationa
Performance |
| Timeline |
| Royal Bank |
| Restaurant Brands |
Royal Bank and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Restaurant Brands
The main advantage of trading using opposite Royal Bank and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. Brookfield Office Properties | Royal Bank vs. Brookfield Office Properties | Royal Bank vs. Brookfield Infrastructure Partners |
| Restaurant Brands vs. JPMorgan Chase Co | Restaurant Brands vs. Toronto Dominion Bank | Restaurant Brands vs. Royal Bank of | Restaurant Brands vs. Royal Bank of |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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