Correlation Between IShares Canadian and RBC Quant
Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares Canadian HYBrid and RBC Quant Dividend, you can compare the effects of market volatilities on IShares 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 IShares Canadian with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and RBC Quant.
Diversification Opportunities for IShares Canadian and RBC Quant
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and RBC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid 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 IShares 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and RBC Quant go up and down completely randomly.
Pair Corralation between IShares Canadian and RBC Quant
Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.38 times less return on investment than RBC Quant. But when comparing it to its historical volatility, iShares Canadian HYBrid is 2.7 times less risky than RBC Quant. It trades about 0.18 of its potential returns per unit of risk. RBC Quant Dividend is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,235 in RBC Quant Dividend on September 25, 2024 and sell it today you would earn a total of 346.00 from holding RBC Quant Dividend or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. RBC Quant Dividend
Performance |
| Timeline |
| iShares Canadian HYBrid |
| RBC Quant Dividend |
IShares Canadian and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and RBC Quant
The main advantage of trading using opposite IShares Canadian and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.| IShares Canadian vs. BMO Long Corporate | IShares Canadian vs. BMO Short Corporate | IShares Canadian vs. BMO High Yield | IShares Canadian vs. BMO Short Provincial |
| RBC Quant vs. Vanguard Total Market | RBC Quant vs. Vanguard FTSE Emerging | RBC Quant vs. Vanguard FTSE Canada | RBC Quant vs. iShares Canadian HYBrid |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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