Correlation Between PHN Multi and Royal Canadian

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

By analyzing existing cross correlation between PHN Multi Style All Cap and Royal Canadian Mint, you can compare the effects of market volatilities on PHN Multi and Royal 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 PHN Multi with a short position of Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Royal Canadian.

Diversification Opportunities for PHN Multi and Royal Canadian

-0.11

Correlation Coefficient

PHN Multi  Royal Canadian

Good diversification

The 3 months correlation between PHN and Royal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of PHN Multi i.e., PHN Multi and Royal Canadian go up and down completely randomly.

Pair Corralation between PHN Multi and Royal Canadian

Assuming the 90 days trading horizon PHN Multi is expected to generate 1.26 times less return on investment than Royal Canadian. But when comparing it to its historical volatility, PHN Multi Style All Cap is 1.35 times less risky than Royal Canadian. It trades about 0.13 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,205  in Royal Canadian Mint on June 22, 2024 and sell it today you would earn a total of  406.00  from holding Royal Canadian Mint or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

PHN Multi Style All Cap  vs.  Royal Canadian Mint

PHN Multi Style

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Royal Canadian Mint

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Canadian Mint are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Royal Canadian may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with PHN Multi and Royal Canadian

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

The idea behind PHN Multi Style All Cap and Royal Canadian Mint 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.