Correlation Between IShares Core and RBC Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Core and RBC Canadian 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 IShares Core and RBC Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and RBC Canadian Preferred, you can compare the effects of market volatilities on IShares Core and RBC Canadian 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 IShares Core with a short position of RBC Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and RBC Canadian.
Diversification Opportunities for IShares Core and RBC Canadian
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and RBC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and RBC Canadian Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Canadian Preferred and IShares Core 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 iShares Core Canadian are associated (or correlated) with RBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Canadian Preferred has no effect on the direction of IShares Core i.e., IShares Core and RBC Canadian go up and down completely randomly.
Pair Corralation between IShares Core and RBC Canadian
Assuming the 90 days trading horizon IShares Core is expected to generate 2.91 times less return on investment than RBC Canadian. In addition to that, IShares Core is 1.11 times more volatile than RBC Canadian Preferred. It trades about 0.17 of its total potential returns per unit of risk. RBC Canadian Preferred is currently generating about 0.54 per unit of volatility. If you would invest 2,070 in RBC Canadian Preferred on September 19, 2024 and sell it today you would earn a total of 90.00 from holding RBC Canadian Preferred or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core Canadian vs. RBC Canadian Preferred
Performance |
| Timeline |
| iShares Core Canadian |
| RBC Canadian Preferred |
IShares Core and RBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and RBC Canadian
The main advantage of trading using opposite IShares Core and RBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, RBC Canadian 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 Canadian will offset losses from the drop in RBC Canadian's long position.| IShares Core vs. iShares Canadian Government | IShares Core vs. iShares Canadian Short | IShares Core vs. iShares Core Canadian | IShares Core vs. iShares Canadian Real |
| RBC Canadian vs. iShares 1 5 Year | RBC Canadian vs. iShares 1 5 Year | RBC Canadian vs. iShares Core Canadian | RBC Canadian vs. iShares Global Monthly |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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