Correlation Between RBC Canadian and Evolve Enhanced

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

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

Diversification Opportunities for RBC Canadian and Evolve Enhanced

-0.11

Correlation Coefficient

RBC Canadian  Evolve Enhanced

Good diversification

The 3 months correlation between RBC and Evolve is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and Evolve Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Enhanced Yield and RBC Canadian 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 Canadian Equity are associated (or correlated) with Evolve Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Enhanced Yield has no effect on the direction of RBC Canadian i.e., RBC Canadian and Evolve Enhanced go up and down completely randomly.

Pair Corralation between RBC Canadian and Evolve Enhanced

Assuming the 90 days trading horizon RBC Canadian Equity is expected to generate 0.79 times more return on investment than Evolve Enhanced. However, RBC Canadian Equity is 1.27 times less risky than Evolve Enhanced. It trades about 0.41 of its potential returns per unit of risk. Evolve Enhanced Yield is currently generating about -0.01 per unit of risk. If you would invest  3,277  in RBC Canadian Equity on April 23, 2025 and sell it today you would earn a total of  332.00  from holding RBC Canadian Equity or generate 10.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

RBC Canadian Equity  vs.  Evolve Enhanced Yield

RBC Canadian Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Equity are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, RBC Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Evolve Enhanced Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolve Enhanced Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Evolve Enhanced is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Canadian and Evolve Enhanced

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

The idea behind RBC Canadian Equity and Evolve Enhanced Yield 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.