Correlation Between Dynamic Active and RBC Canadian

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

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

Diversification Opportunities for Dynamic Active and RBC Canadian

0.98

Correlation Coefficient

Dynamic Active  RBC Canadian

Almost no diversification

The 3 months correlation between Dynamic and RBC is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Global and RBC Canadian Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Canadian Preferred and Dynamic Active 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 Dynamic Active Global are associated (or correlated) with RBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Canadian Preferred has no effect on the direction of Dynamic Active i.e., Dynamic Active and RBC Canadian go up and down completely randomly.

Pair Corralation between Dynamic Active and RBC Canadian

Assuming the 90 days trading horizon Dynamic Active Global is expected to generate 3.45 times more return on investment than RBC Canadian. However, Dynamic Active is 3.45 times more volatile than RBC Canadian Preferred. It trades about 0.38 of its potential returns per unit of risk. RBC Canadian Preferred is currently generating about 0.82 per unit of risk. If you would invest  5,977  in Dynamic Active Global on April 23, 2025 and sell it today you would earn a total of  1,306  from holding Dynamic Active Global or generate 21.85% return on investment over 90 days.

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

Dynamic Active Global  vs.  RBC Canadian Preferred

Dynamic Active Global

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Global are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Dynamic Active displayed solid returns over the last few months and may actually be approaching a breakup point.

RBC Canadian Preferred

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Preferred are ranked lower than 64 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, RBC Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynamic Active and RBC Canadian

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

The idea behind Dynamic Active Global and RBC Canadian 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.