Correlation Between Royal Bank and Trican Well
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Trican Well 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 Trican Well 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 Trican Well Service, you can compare the effects of market volatilities on Royal Bank and Trican Well 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 Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Trican Well.
Diversification Opportunities for Royal Bank and Trican Well
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Royal and Trican is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Royal Bank i.e., Royal Bank and Trican Well go up and down completely randomly.
Pair Corralation between Royal Bank and Trican Well
Assuming the 90 days horizon Royal Bank is expected to generate 6.71 times less return on investment than Trican Well. But when comparing it to its historical volatility, Royal Bank of is 2.47 times less risky than Trican Well. It trades about 0.09 of its potential returns per unit of risk. Trican Well Service is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 446.00 in Trican Well Service on August 24, 2024 and sell it today you would earn a total of 53.00 from holding Trican Well Service or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Trican Well Service
Performance |
| Timeline |
| Royal Bank |
| Trican Well Service |
Royal Bank and Trican Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Trican Well
The main advantage of trading using opposite Royal Bank and Trican Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Trican Well 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 Trican Well will offset losses from the drop in Trican Well'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 |
| Trican Well vs. Calfrac Well Services | Trican Well vs. Precision Drilling | Trican Well vs. Ensign Energy Services | Trican Well vs. Birchcliff 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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