Correlation Between Royal Bank and Aecon
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Aecon 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 Aecon 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 Aecon Group, you can compare the effects of market volatilities on Royal Bank and Aecon 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 Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Aecon.
Diversification Opportunities for Royal Bank and Aecon
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Aecon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon 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 Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Royal Bank i.e., Royal Bank and Aecon go up and down completely randomly.
Pair Corralation between Royal Bank and Aecon
Assuming the 90 days horizon Royal Bank is expected to generate 15.89 times less return on investment than Aecon. But when comparing it to its historical volatility, Royal Bank of is 4.73 times less risky than Aecon. It trades about 0.09 of its potential returns per unit of risk. Aecon Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,228 in Aecon Group on August 24, 2024 and sell it today you would earn a total of 662.00 from holding Aecon Group or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Aecon Group
Performance |
| Timeline |
| Royal Bank |
| Aecon Group |
Royal Bank and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Aecon
The main advantage of trading using opposite Royal Bank and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| Royal Bank vs. Toronto Dominion Bank | Royal Bank vs. Bank of Nova | Royal Bank vs. Bank of Montreal | Royal Bank vs. Canadian Imperial Bank |
| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |