Correlation Between RBC Quant and IShares High

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

By analyzing existing cross correlation between RBC Quant Dividend and iShares High Dividend, you can compare the effects of market volatilities on RBC Quant and IShares High 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 IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and IShares High.

Diversification Opportunities for RBC Quant and IShares High

0.96

Correlation Coefficient

RBC Quant  IShares High

Almost no diversification

The 3 months correlation between RBC and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Dividend and iShares High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Dividend 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 Dividend are associated (or correlated) with IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Dividend has no effect on the direction of RBC Quant i.e., RBC Quant and IShares High go up and down completely randomly.

Pair Corralation between RBC Quant and IShares High

Assuming the 90 days trading horizon RBC Quant Dividend is expected to generate 1.12 times more return on investment than IShares High. However, RBC Quant is 1.12 times more volatile than iShares High Dividend. It trades about 0.3 of its potential returns per unit of risk. iShares High Dividend is currently generating about 0.18 per unit of risk. If you would invest  2,280  in RBC Quant Dividend on August 31, 2024 and sell it today you would earn a total of  295.00  from holding RBC Quant Dividend or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

RBC Quant Dividend  vs.  iShares High Dividend

RBC Quant Dividend

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant Dividend are ranked lower than 23 (%) 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 December 2024.

iShares High Dividend

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares High Dividend are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares High may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with RBC Quant and IShares High

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

The idea behind RBC Quant Dividend and iShares High Dividend 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.