Correlation Between Vanguard Total and RBC Quant
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total 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 Total Market and RBC Quant Dividend, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and RBC Quant.
Diversification Opportunities for Vanguard Total and RBC Quant
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and RBC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Market and RBC Quant Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Dividend and Vanguard Total 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 Total Market 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 Dividend has no effect on the direction of Vanguard Total i.e., Vanguard Total and RBC Quant go up and down completely randomly.
Pair Corralation between Vanguard Total and RBC Quant
Assuming the 90 days trading horizon Vanguard Total is expected to generate 3.91 times less return on investment than RBC Quant. But when comparing it to its historical volatility, Vanguard Total Market is 12.48 times less risky than RBC Quant. It trades about 0.16 of its potential returns per unit of risk. RBC Quant Dividend is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,297 in RBC Quant Dividend on September 3, 2024 and sell it today you would earn a total of 331.00 from holding RBC Quant Dividend or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Market vs. RBC Quant Dividend
Performance |
| Timeline |
| Vanguard Total Market |
| RBC Quant Dividend |
Vanguard Total and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and RBC Quant
The main advantage of trading using opposite Vanguard Total and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total vs. Vanguard FTSE Canada | Vanguard Total vs. Vanguard FTSE Emerging | Vanguard Total vs. iShares Core MSCI | Vanguard Total vs. Vanguard Canadian Aggregate |
| RBC Quant vs. Vanguard Dividend Appreciation | RBC Quant vs. iShares Dividend Growers | RBC Quant vs. BMO Dividend ETF | RBC Quant vs. BMO High 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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