Correlation Between Wealthsimple North and RBC Quant
Can any of the company-specific risk be diversified away by investing in both Wealthsimple North 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 Wealthsimple North and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wealthsimple North America and RBC Quant EAFE, you can compare the effects of market volatilities on Wealthsimple North 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 Wealthsimple North with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple North and RBC Quant.
Diversification Opportunities for Wealthsimple North and RBC Quant
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wealthsimple and RBC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple North America and RBC Quant EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant EAFE and Wealthsimple North 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 Wealthsimple North America 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 EAFE has no effect on the direction of Wealthsimple North i.e., Wealthsimple North and RBC Quant go up and down completely randomly.
Pair Corralation between Wealthsimple North and RBC Quant
Assuming the 90 days trading horizon Wealthsimple North is expected to generate 3.32 times less return on investment than RBC Quant. But when comparing it to its historical volatility, Wealthsimple North America is 1.36 times less risky than RBC Quant. It trades about 0.06 of its potential returns per unit of risk. RBC Quant EAFE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,471 in RBC Quant EAFE on December 5, 2025 and sell it today you would earn a total of 269.00 from holding RBC Quant EAFE or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.36% |
| Values | Daily Returns |
Wealthsimple North America vs. RBC Quant EAFE
Performance |
| Timeline |
| Wealthsimple North |
| RBC Quant EAFE |
Wealthsimple North and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wealthsimple North and RBC Quant
The main advantage of trading using opposite Wealthsimple North and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wealthsimple North 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.The idea behind Wealthsimple North America and RBC Quant EAFE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| RBC Quant vs. Vanguard Dividend Appreciation | RBC Quant vs. Hamilton Enhanced Multi Sector | RBC Quant vs. Wealthsimple North America | RBC Quant vs. Invesco Canadian 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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