Correlation Between Vanguard Canadian and RBC Quant
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and RBC Quant 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 Vanguard Canadian and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Aggregate and RBC Quant Emerging, you can compare the effects of market volatilities on Vanguard Canadian and RBC Quant 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 Vanguard Canadian with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and RBC Quant.
Diversification Opportunities for Vanguard Canadian and RBC Quant
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and RBC is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Aggregate and RBC Quant Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Emerging and Vanguard Canadian 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 Vanguard Canadian Aggregate are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant Emerging has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and RBC Quant go up and down completely randomly.
Pair Corralation between Vanguard Canadian and RBC Quant
Assuming the 90 days trading horizon Vanguard Canadian Aggregate is expected to under-perform the RBC Quant. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Canadian Aggregate is 1.82 times less risky than RBC Quant. The etf trades about -0.27 of its potential returns per unit of risk. The RBC Quant Emerging is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,175 in RBC Quant Emerging on October 14, 2024 and sell it today you would lose (14.00) from holding RBC Quant Emerging or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Canadian Aggregate vs. RBC Quant Emerging
Performance |
| Timeline |
| Vanguard Canadian |
| RBC Quant Emerging |
Vanguard Canadian and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and RBC Quant
The main advantage of trading using opposite Vanguard Canadian and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, RBC Quant 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 RBC Quant will offset losses from the drop in RBC Quant's long position.| Vanguard Canadian vs. Vanguard Canadian Short | Vanguard Canadian vs. Vanguard FTSE Canada | Vanguard Canadian vs. Vanguard FTSE Global | Vanguard Canadian vs. Vanguard FTSE Emerging |
| RBC Quant vs. RBC Quant European | RBC Quant vs. RBC Quant Canadian | RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant Dividend |
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.
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