Correlation Between PHN Multi and RBC Global

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

By analyzing existing cross correlation between PHN Multi Style All Cap and RBC Global Technology, you can compare the effects of market volatilities on PHN Multi and RBC Global 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 PHN Multi with a short position of RBC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and RBC Global.

Diversification Opportunities for PHN Multi and RBC Global

0.73

Correlation Coefficient

PHN Multi  RBC Global

Poor diversification

The 3 months correlation between PHN and RBC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and RBC Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Global Technology and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with RBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Global Technology has no effect on the direction of PHN Multi i.e., PHN Multi and RBC Global go up and down completely randomly.

Pair Corralation between PHN Multi and RBC Global

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to under-perform the RBC Global. In addition to that, PHN Multi is 1.42 times more volatile than RBC Global Technology. It trades about 0.0 of its total potential returns per unit of risk. RBC Global Technology is currently generating about 0.21 per unit of volatility. If you would invest  2,159  in RBC Global Technology on September 26, 2024 and sell it today you would earn a total of  318.00  from holding RBC Global Technology or generate 14.73% return on investment over 90 days.

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

PHN Multi Style All Cap  vs.  RBC Global Technology

PHN Multi Style

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

RBC Global Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Technology are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHN Multi and RBC Global

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

The idea behind PHN Multi Style All Cap and RBC Global Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.