Correlation Between Royal Bank and Theratechnologies
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Theratechnologies 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 Theratechnologies 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 Theratechnologies, you can compare the effects of market volatilities on Royal Bank and Theratechnologies 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 Theratechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Theratechnologies.
Diversification Opportunities for Royal Bank and Theratechnologies
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Theratechnologies is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Theratechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theratechnologies 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 Theratechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theratechnologies has no effect on the direction of Royal Bank i.e., Royal Bank and Theratechnologies go up and down completely randomly.
Pair Corralation between Royal Bank and Theratechnologies
Assuming the 90 days horizon Royal Bank of is expected to generate 0.15 times more return on investment than Theratechnologies. However, Royal Bank of is 6.57 times less risky than Theratechnologies. It trades about 0.1 of its potential returns per unit of risk. Theratechnologies is currently generating about 0.0 per unit of risk. If you would invest 11,787 in Royal Bank of on September 12, 2024 and sell it today you would earn a total of 6,060 from holding Royal Bank of or generate 51.41% 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. Theratechnologies
Performance |
| Timeline |
| Royal Bank |
| Theratechnologies |
Royal Bank and Theratechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Theratechnologies
The main advantage of trading using opposite Royal Bank and Theratechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Theratechnologies 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 Theratechnologies will offset losses from the drop in Theratechnologies' 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 |
| Theratechnologies vs. Premium Income | Theratechnologies vs. E L Financial Corp | Theratechnologies vs. Fairfax Financial Holdings | Theratechnologies vs. Fairfax Fin Hld |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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