Correlation Between Ab Global and Rbc Ultra

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

By analyzing existing cross correlation between Ab Global Real and Rbc Ultra Short Fixed, you can compare the effects of market volatilities on Ab Global and Rbc Ultra 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 Ab Global with a short position of Rbc Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Rbc Ultra.

Diversification Opportunities for Ab Global and Rbc Ultra

-0.78

Correlation Coefficient

Ab Global  Rbc Ultra

Pay attention - limited upside

The 3 months correlation between AEEIX and Rbc is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Real and Rbc Ultra Short Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Ultra Short and Ab Global 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 Ab Global Real are associated (or correlated) with Rbc Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Ultra Short has no effect on the direction of Ab Global i.e., Ab Global and Rbc Ultra go up and down completely randomly.

Pair Corralation between Ab Global and Rbc Ultra

Assuming the 90 days horizon Ab Global Real is expected to under-perform the Rbc Ultra. In addition to that, Ab Global is 8.85 times more volatile than Rbc Ultra Short Fixed. It trades about -0.11 of its total potential returns per unit of risk. Rbc Ultra Short Fixed is currently generating about 0.19 per unit of volatility. If you would invest  996.00  in Rbc Ultra Short Fixed on September 12, 2024 and sell it today you would earn a total of  10.00  from holding Rbc Ultra Short Fixed or generate 1.0% return on investment over 90 days.

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

Ab Global Real  vs.  Rbc Ultra Short Fixed

Ab Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbc Ultra Short

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Ultra Short Fixed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Rbc Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Global and Rbc Ultra

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

The idea behind Ab Global Real and Rbc Ultra Short Fixed 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.