Correlation Between RBC Quant and CI Europe

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

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

Diversification Opportunities for RBC Quant and CI Europe

0.62

Correlation Coefficient

RBC Quant  CI Europe

Poor diversification

The 3 months correlation between RBC and EHE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant European and CI Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Europe Hedged 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 European are associated (or correlated) with CI Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Europe Hedged has no effect on the direction of RBC Quant i.e., RBC Quant and CI Europe go up and down completely randomly.

Pair Corralation between RBC Quant and CI Europe

Assuming the 90 days trading horizon RBC Quant European is expected to generate 0.56 times more return on investment than CI Europe. However, RBC Quant European is 1.78 times less risky than CI Europe. It trades about 0.06 of its potential returns per unit of risk. CI Europe Hedged is currently generating about -0.02 per unit of risk. If you would invest  2,877  in RBC Quant European on April 22, 2025 and sell it today you would earn a total of  30.00  from holding RBC Quant European or generate 1.04% return on investment over 90 days.

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

RBC Quant European  vs.  CI Europe Hedged

RBC Quant European

Risk-Adjusted Performance

Solid

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

CI Europe Hedged

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Europe Hedged are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI Europe may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with RBC Quant and CI Europe

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

The idea behind RBC Quant European and CI Europe Hedged 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.