Correlation Between IShares SPTSX and RBC Discount
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and RBC Discount 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 SPTSX and RBC Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and RBC Discount Bond, you can compare the effects of market volatilities on IShares SPTSX and RBC Discount 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 SPTSX with a short position of RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and RBC Discount.
Diversification Opportunities for IShares SPTSX and RBC Discount
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and RBC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and RBC Discount go up and down completely randomly.
Pair Corralation between IShares SPTSX and RBC Discount
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 2.48 times more return on investment than RBC Discount. However, IShares SPTSX is 2.48 times more volatile than RBC Discount Bond. It trades about 0.18 of its potential returns per unit of risk. RBC Discount Bond is currently generating about 0.04 per unit of risk. If you would invest 1,777 in iShares SPTSX Capped on August 25, 2024 and sell it today you would earn a total of 83.00 from holding iShares SPTSX Capped or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares SPTSX Capped vs. RBC Discount Bond
Performance |
| Timeline |
| iShares SPTSX Capped |
| RBC Discount Bond |
IShares SPTSX and RBC Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and RBC Discount
The main advantage of trading using opposite IShares SPTSX and RBC Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, RBC Discount 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 Discount will offset losses from the drop in RBC Discount's long position.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Global | IShares SPTSX vs. iShares SPTSX 60 | IShares SPTSX vs. iShares SPTSX Capped |
| RBC Discount vs. Franklin Global Aggregate | RBC Discount vs. CI Enhanced Government | RBC Discount vs. PIMCO Global Short | RBC Discount vs. CIBC Core Plus |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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