Correlation Between Destinations Global and Rbc Funds

Can any of the company-specific risk be diversified away by investing in both Destinations Global and Rbc Funds 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 Destinations Global and Rbc Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Destinations Global Fixed and Rbc Funds Trust, you can compare the effects of market volatilities on Destinations Global and Rbc Funds 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 Destinations Global with a short position of Rbc Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destinations Global and Rbc Funds.

Diversification Opportunities for Destinations Global and Rbc Funds

Almost no diversification

The 3 months correlation between Destinations and Rbc is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Destinations Global Fixed and Rbc Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Funds Trust and Destinations Global 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 Destinations Global Fixed are associated (or correlated) with Rbc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Funds Trust has no effect on the direction of Destinations Global i.e., Destinations Global and Rbc Funds go up and down completely randomly.

Pair Corralation between Destinations Global and Rbc Funds

Assuming the 90 days horizon Destinations Global is expected to generate 1.63 times less return on investment than Rbc Funds. In addition to that, Destinations Global is 1.04 times more volatile than Rbc Funds Trust. It trades about 0.18 of its total potential returns per unit of risk. Rbc Funds Trust is currently generating about 0.3 per unit of volatility. If you would invest  986.00  in Rbc Funds Trust on June 23, 2023 and sell it today you would earn a total of  7.00  from holding Rbc Funds Trust or generate 0.71% return on investment over 90 days.

Destinations Global Fixed  vs.  Rbc Funds Trust

Destinations Global Fixed

Destinations Performance

18 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Destinations Global Fixed are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Destinations Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Rbc Funds Trust

Rbc Performance

29 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Funds Trust are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rbc Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Destinations Global and Rbc Funds

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

The idea behind Destinations Global Fixed and Rbc Funds Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.