Correlation Between Capital Group and RBC Dividend

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

By analyzing existing cross correlation between Capital Group Global and RBC Dividend Cur, you can compare the effects of market volatilities on Capital Group and RBC Dividend 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 Capital Group with a short position of RBC Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and RBC Dividend.

Diversification Opportunities for Capital Group and RBC Dividend

0.93

Correlation Coefficient

Capital Group  RBC Dividend

Almost no diversification

The 3 months correlation between Capital and RBC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Global and RBC Dividend Cur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Dividend Cur and Capital Group 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 Capital Group Global are associated (or correlated) with RBC Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Dividend Cur has no effect on the direction of Capital Group i.e., Capital Group and RBC Dividend go up and down completely randomly.

Pair Corralation between Capital Group and RBC Dividend

Assuming the 90 days trading horizon Capital Group Global is expected to generate 1.16 times more return on investment than RBC Dividend. However, Capital Group is 1.16 times more volatile than RBC Dividend Cur. It trades about 0.26 of its potential returns per unit of risk. RBC Dividend Cur is currently generating about 0.14 per unit of risk. If you would invest  5,672  in Capital Group Global on September 12, 2024 and sell it today you would earn a total of  608.00  from holding Capital Group Global or generate 10.72% return on investment over 90 days.

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

Capital Group Global  vs.  RBC Dividend Cur

Capital Group Global

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Global are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Capital Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RBC Dividend Cur

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Dividend Cur are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, RBC Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital Group and RBC Dividend

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

The idea behind Capital Group Global and RBC Dividend Cur 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.