Correlation Between RBC Global and PICTON Credit

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

Diversification Opportunities for RBC Global and PICTON Credit

0.86

Correlation Coefficient

RBC Global  PICTON Credit

Very poor diversification

The 3 months correlation between RBC and PICTON is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding RBC Global 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 Global 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 Global 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 Global i.e., RBC Global and PICTON Credit go up and down completely randomly.

Pair Corralation between RBC Global and PICTON Credit

Assuming the 90 days trading horizon RBC Global Equity is expected to generate 2.18 times more return on investment than PICTON Credit. However, RBC Global is 2.18 times more volatile than PICTON Credit Opportunities. It trades about 0.24 of its potential returns per unit of risk. PICTON Credit Opportunities is currently generating about 0.15 per unit of risk. If you would invest  2,316  in RBC Global Equity on April 24, 2025 and sell it today you would earn a total of  280.00  from holding RBC Global Equity or generate 12.09% return on investment over 90 days.

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

RBC Global Equity  vs.  PICTON Credit Opportunities

RBC Global Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat inconsistent basic indicators, RBC Global 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 12 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Global and PICTON Credit

The main advantage of trading using opposite RBC Global and PICTON Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Global 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 Global 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.