Correlation Between RBC Canadian and Mackenzie Ivy

Can any of the company-specific risk be diversified away by investing in both RBC Canadian and Mackenzie Ivy 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 RBC Canadian and Mackenzie Ivy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RBC Canadian Equity and Mackenzie Ivy European, you can compare the effects of market volatilities on RBC Canadian and Mackenzie Ivy 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 RBC Canadian with a short position of Mackenzie Ivy. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and Mackenzie Ivy.

Diversification Opportunities for RBC Canadian and Mackenzie Ivy

-0.1

Correlation Coefficient

RBC Canadian  Mackenzie Ivy

Good diversification

The 3 months correlation between RBC and Mackenzie is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and Mackenzie Ivy European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Ivy European and RBC 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 RBC Canadian Equity are associated (or correlated) with Mackenzie Ivy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Ivy European has no effect on the direction of RBC Canadian i.e., RBC Canadian and Mackenzie Ivy go up and down completely randomly.

Pair Corralation between RBC Canadian and Mackenzie Ivy

Assuming the 90 days trading horizon RBC Canadian Equity is expected to generate 0.62 times more return on investment than Mackenzie Ivy. However, RBC Canadian Equity is 1.6 times less risky than Mackenzie Ivy. It trades about 0.19 of its potential returns per unit of risk. Mackenzie Ivy European is currently generating about 0.03 per unit of risk. If you would invest  3,251  in RBC Canadian Equity on September 12, 2024 and sell it today you would earn a total of  158.00  from holding RBC Canadian Equity or generate 4.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RBC Canadian Equity  vs.  Mackenzie Ivy European

RBC Canadian Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, RBC Canadian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mackenzie Ivy European

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Ivy European are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Mackenzie Ivy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Canadian and Mackenzie Ivy

The main advantage of trading using opposite RBC Canadian and Mackenzie Ivy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Canadian position performs unexpectedly, Mackenzie Ivy 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 Mackenzie Ivy will offset losses from the drop in Mackenzie Ivy's long position.

The idea behind RBC Canadian Equity and Mackenzie Ivy European 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.