Correlation Between RBC Canadian and PICTON Credit

Can any of the company-specific risk be diversified away by investing in both RBC Canadian and PICTON Credit 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 PICTON Credit 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 PICTON Credit Opportunities, you can compare the effects of market volatilities on RBC Canadian and PICTON Credit 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 PICTON Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Canadian and PICTON Credit.

Diversification Opportunities for RBC Canadian and PICTON Credit

0.94

Correlation Coefficient

RBC Canadian  PICTON Credit

Almost no diversification

The 3 months correlation between RBC and PICTON is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Equity and PICTON Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICTON Credit Opport 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 PICTON Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICTON Credit Opport has no effect on the direction of RBC Canadian i.e., RBC Canadian and PICTON Credit go up and down completely randomly.

Pair Corralation between RBC Canadian and PICTON Credit

Assuming the 90 days trading horizon RBC Canadian Equity is expected to generate 1.08 times more return on investment than PICTON Credit. However, RBC Canadian is 1.08 times more volatile than PICTON Credit Opportunities. It trades about 0.46 of its potential returns per unit of risk. PICTON Credit Opportunities is currently generating about 0.14 per unit of risk. If you would invest  3,223  in RBC Canadian Equity on April 20, 2025 and sell it today you would earn a total of  394.00  from holding RBC Canadian Equity or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

RBC Canadian Equity  vs.  PICTON Credit Opportunities

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 36 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PICTON Credit Opport

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICTON Credit Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, PICTON Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Canadian and PICTON Credit

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

The idea behind RBC Canadian Equity and PICTON Credit Opportunities 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.