Correlation Between RBC European and RBC Sciences

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

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

Diversification Opportunities for RBC European and RBC Sciences

-0.52

Correlation Coefficient

RBC European  RBC Sciences

Excellent diversification

The 3 months correlation between RBC and RBC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding RBC European Mid Cap and RBC sciences biologiques in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC sciences biologiques and RBC European 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 European Mid Cap are associated (or correlated) with RBC Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC sciences biologiques has no effect on the direction of RBC European i.e., RBC European and RBC Sciences go up and down completely randomly.

Pair Corralation between RBC European and RBC Sciences

Assuming the 90 days trading horizon RBC European Mid Cap is expected to under-perform the RBC Sciences. But the fund apears to be less risky and, when comparing its historical volatility, RBC European Mid Cap is 1.3 times less risky than RBC Sciences. The fund trades about -0.06 of its potential returns per unit of risk. The RBC sciences biologiques is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,823  in RBC sciences biologiques on September 4, 2024 and sell it today you would earn a total of  543.00  from holding RBC sciences biologiques or generate 11.26% return on investment over 90 days.

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

RBC European Mid Cap  vs.  RBC sciences biologiques

RBC European Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC European Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, RBC European is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

RBC sciences biologiques

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC sciences biologiques are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, RBC Sciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RBC European and RBC Sciences

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

The idea behind RBC European Mid Cap and RBC sciences biologiques 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.