Correlation Between RBC Quant and Russell Investments

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

By analyzing existing cross correlation between RBC Quant EAFE and Russell Investments Real, you can compare the effects of market volatilities on RBC Quant and Russell Investments 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 Russell Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Russell Investments.

Diversification Opportunities for RBC Quant and Russell Investments

0.92

Correlation Coefficient

RBC Quant  Russell Investments

Almost no diversification

The 3 months correlation between RBC and Russell is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant EAFE and Russell Investments Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell Investments Real 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 EAFE are associated (or correlated) with Russell Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell Investments Real has no effect on the direction of RBC Quant i.e., RBC Quant and Russell Investments go up and down completely randomly.

Pair Corralation between RBC Quant and Russell Investments

Assuming the 90 days trading horizon RBC Quant EAFE is expected to generate 1.11 times more return on investment than Russell Investments. However, RBC Quant is 1.11 times more volatile than Russell Investments Real. It trades about 0.23 of its potential returns per unit of risk. Russell Investments Real is currently generating about 0.17 per unit of risk. If you would invest  2,879  in RBC Quant EAFE on April 22, 2025 and sell it today you would earn a total of  306.00  from holding RBC Quant EAFE or generate 10.63% return on investment over 90 days.

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

RBC Quant EAFE  vs.  Russell Investments Real

RBC Quant EAFE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant EAFE are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, RBC Quant may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Russell Investments Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Russell Investments Real are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Russell Investments may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with RBC Quant and Russell Investments

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

The idea behind RBC Quant EAFE and Russell Investments Real 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.