Correlation Between Royal Bank and Entourage Health
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Entourage Health 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 Entourage Health 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 Entourage Health Corp, you can compare the effects of market volatilities on Royal Bank and Entourage Health 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 Entourage Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Entourage Health.
Diversification Opportunities for Royal Bank and Entourage Health
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Entourage is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health 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 Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Royal Bank i.e., Royal Bank and Entourage Health go up and down completely randomly.
Pair Corralation between Royal Bank and Entourage Health
Assuming the 90 days horizon Royal Bank is expected to generate 43.47 times less return on investment than Entourage Health. But when comparing it to its historical volatility, Royal Bank of is 58.17 times less risky than Entourage Health. It trades about 0.14 of its potential returns per unit of risk. Entourage Health Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Entourage Health Corp on August 26, 2024 and sell it today you would lose (1.00) from holding Entourage Health Corp or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Entourage Health Corp
Performance |
| Timeline |
| Royal Bank |
| Entourage Health Corp |
Royal Bank and Entourage Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Entourage Health
The main advantage of trading using opposite Royal Bank and Entourage Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Entourage Health 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 Entourage Health will offset losses from the drop in Entourage Health'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 |
| Entourage Health vs. Auxly Cannabis Group | Entourage Health vs. Lifeist Wellness | Entourage Health vs. Medipharm Labs 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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