Correlation Between RBC Global and CDSPI SP

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

By analyzing existing cross correlation between RBC Global Technology and CDSPI SP 500, you can compare the effects of market volatilities on RBC Global and CDSPI SP 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 CDSPI SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Global and CDSPI SP.

Diversification Opportunities for RBC Global and CDSPI SP

0.81

Correlation Coefficient

RBC Global  CDSPI SP

Very poor diversification

The 3 months correlation between RBC and CDSPI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RBC Global Technology and CDSPI SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI SP 500 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 Technology are associated (or correlated) with CDSPI SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI SP 500 has no effect on the direction of RBC Global i.e., RBC Global and CDSPI SP go up and down completely randomly.

Pair Corralation between RBC Global and CDSPI SP

Assuming the 90 days trading horizon RBC Global Technology is expected to generate 1.35 times more return on investment than CDSPI SP. However, RBC Global is 1.35 times more volatile than CDSPI SP 500. It trades about 0.34 of its potential returns per unit of risk. CDSPI SP 500 is currently generating about 0.27 per unit of risk. If you would invest  2,086  in RBC Global Technology on April 24, 2025 and sell it today you would earn a total of  407.00  from holding RBC Global Technology or generate 19.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.33%
Values	Daily Returns

RBC Global Technology  vs.  CDSPI SP 500

RBC Global Technology

Risk-Adjusted Performance

Strong

Over the last 90 days RBC Global Technology has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat weak technical and fundamental indicators, RBC Global sustained solid returns over the last few months and may actually be approaching a breakup point.

CDSPI SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI SP 500 are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, CDSPI SP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Global and CDSPI SP

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

The idea behind RBC Global Technology and CDSPI SP 500 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..