Correlation Between Labrador Iron and Royal Bank

Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Royal Bank 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 Labrador Iron and Royal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Labrador Iron Ore and Royal Bank of, you can compare the effects of market volatilities on Labrador Iron and Royal Bank 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 Labrador Iron with a short position of Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Royal Bank.

Diversification Opportunities for Labrador Iron and Royal Bank

-0.21

Correlation Coefficient

Labrador Iron  Royal Bank

Very good diversification

The 3 months correlation between Labrador and Royal is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank and Labrador Iron 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 Labrador Iron Ore are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Labrador Iron i.e., Labrador Iron and Royal Bank go up and down completely randomly.

Pair Corralation between Labrador Iron and Royal Bank

Assuming the 90 days trading horizon Labrador Iron is expected to generate 2.14 times less return on investment than Royal Bank. In addition to that, Labrador Iron is 5.36 times more volatile than Royal Bank of. It trades about 0.02 of its total potential returns per unit of risk. Royal Bank of is currently generating about 0.25 per unit of volatility. If you would invest  2,435  in Royal Bank of on April 23, 2025 and sell it today you would earn a total of  86.00  from holding Royal Bank of or generate 3.53% return on investment over 90 days.

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

Labrador Iron Ore  vs.  Royal Bank of

Labrador Iron Ore

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Labrador Iron Ore are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Royal Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Royal Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Labrador Iron and Royal Bank

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

The idea behind Labrador Iron Ore and Royal Bank of 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.