Correlation Between WaveFront All and RBC Canadian

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

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

Diversification Opportunities for WaveFront All and RBC Canadian

0.91

Correlation Coefficient

WaveFront All  RBC Canadian

Almost no diversification

The 3 months correlation between WaveFront and RBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WaveFront All Weather Alternat and RBC Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Canadian Equity and WaveFront All 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 WaveFront All Weather Alternative are associated (or correlated) with RBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Canadian Equity has no effect on the direction of WaveFront All i.e., WaveFront All and RBC Canadian go up and down completely randomly.

Pair Corralation between WaveFront All and RBC Canadian

Assuming the 90 days trading horizon WaveFront All is expected to generate 1.72 times less return on investment than RBC Canadian. In addition to that, WaveFront All is 1.6 times more volatile than RBC Canadian Equity. It trades about 0.17 of its total potential returns per unit of risk. RBC Canadian Equity is currently generating about 0.46 per unit of volatility. If you would invest  3,223  in RBC Canadian Equity on April 20, 2025 and sell it today you would earn a total of  394.00  from holding RBC Canadian Equity or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

WaveFront All Weather Alternat  vs.  RBC Canadian Equity

WaveFront All Weather

Risk-Adjusted Performance

Good

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

RBC Canadian Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Equity are ranked lower than 36 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with WaveFront All and RBC Canadian

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

The idea behind WaveFront All Weather Alternative and RBC Canadian Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.