Correlation Between RBC Quant and CI Enhanced

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

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

Diversification Opportunities for RBC Quant and CI Enhanced

-0.45

Correlation Coefficient

RBC Quant  CI Enhanced

Very good diversification

The 3 months correlation between RBC and FGO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Canadian and CI Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Enhanced Government and RBC Quant 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 Quant Canadian are associated (or correlated) with CI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Enhanced Government has no effect on the direction of RBC Quant i.e., RBC Quant and CI Enhanced go up and down completely randomly.

Pair Corralation between RBC Quant and CI Enhanced

Assuming the 90 days trading horizon RBC Quant Canadian is expected to generate 1.26 times more return on investment than CI Enhanced. However, RBC Quant is 1.26 times more volatile than CI Enhanced Government. It trades about 0.48 of its potential returns per unit of risk. CI Enhanced Government is currently generating about -0.04 per unit of risk. If you would invest  2,884  in RBC Quant Canadian on April 21, 2025 and sell it today you would earn a total of  395.00  from holding RBC Quant Canadian or generate 13.7% return on investment over 90 days.

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

RBC Quant Canadian  vs.  CI Enhanced Government

RBC Quant Canadian

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant Canadian are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, RBC Quant displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Enhanced Government

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Enhanced Government has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Enhanced 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 Quant and CI Enhanced

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

The idea behind RBC Quant Canadian and CI Enhanced Government 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.