Correlation Between RBC Quant and TD Active

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

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

Diversification Opportunities for RBC Quant and TD Active

0.16

Correlation Coefficient

RBC Quant  TD Active

Average diversification

The 3 months correlation between RBC and TPRF is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Canadian and TD Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Preferred and RBC Quant 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 Quant Canadian are associated (or correlated) with TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Preferred has no effect on the direction of RBC Quant i.e., RBC Quant and TD Active go up and down completely randomly.

Pair Corralation between RBC Quant and TD Active

Assuming the 90 days trading horizon RBC Quant Canadian is expected to generate 1.36 times more return on investment than TD Active. However, RBC Quant is 1.36 times more volatile than TD Active Preferred. It trades about 0.21 of its potential returns per unit of risk. TD Active Preferred is currently generating about 0.14 per unit of risk. If you would invest  2,603  in RBC Quant Canadian on September 5, 2024 and sell it today you would earn a total of  427.00  from holding RBC Quant Canadian or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

RBC Quant Canadian  vs.  TD Active Preferred

RBC Quant Canadian

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant Canadian are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, RBC Quant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TD Active Preferred

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TD Active Preferred are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Quant and TD Active

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

The idea behind RBC Quant Canadian and TD Active Preferred 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..