Correlation Between RBC Quant and Purpose Best

Can any of the company-specific risk be diversified away by investing in both RBC Quant and Purpose Best 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 Purpose Best 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 Purpose Best Ideas, you can compare the effects of market volatilities on RBC Quant and Purpose Best 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 Purpose Best. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Purpose Best.

Diversification Opportunities for RBC Quant and Purpose Best

0.81

Correlation Coefficient

RBC Quant  Purpose Best

Very poor diversification

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

Pair Corralation between RBC Quant and Purpose Best

Assuming the 90 days trading horizon RBC Quant is expected to generate 2.05 times less return on investment than Purpose Best. But when comparing it to its historical volatility, RBC Quant Canadian is 2.39 times less risky than Purpose Best. It trades about 0.3 of its potential returns per unit of risk. Purpose Best Ideas is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,636  in Purpose Best Ideas on April 20, 2025 and sell it today you would earn a total of  214.00  from holding Purpose Best Ideas or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

RBC Quant Canadian  vs.  Purpose Best Ideas

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.

Purpose Best Ideas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Best Ideas are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Purpose Best displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Quant and Purpose Best

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

The idea behind RBC Quant Canadian and Purpose Best Ideas 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.