Correlation Between RBC Canadian and First Asset

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

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

Diversification Opportunities for RBC Canadian and First Asset

0.84

Correlation Coefficient

RBC Canadian  First Asset

Very poor diversification

The 3 months correlation between RBC and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding RBC Canadian Bank and First Asset Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Morningstar and RBC Canadian 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 Canadian Bank are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Morningstar has no effect on the direction of RBC Canadian i.e., RBC Canadian and First Asset go up and down completely randomly.

Pair Corralation between RBC Canadian and First Asset

Assuming the 90 days trading horizon RBC Canadian Bank is expected to generate 1.13 times more return on investment than First Asset. However, RBC Canadian is 1.13 times more volatile than First Asset Morningstar. It trades about 0.35 of its potential returns per unit of risk. First Asset Morningstar is currently generating about 0.15 per unit of risk. If you would invest  3,171  in RBC Canadian Bank on August 13, 2025 and sell it today you would earn a total of  489.00  from holding RBC Canadian Bank or generate 15.42% return on investment over 90 days.

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

RBC Canadian Bank  vs.  First Asset Morningstar

RBC Canadian Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Canadian Bank are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, RBC Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

First Asset Morningstar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Morningstar are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Canadian and First Asset

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

The idea behind RBC Canadian Bank and First Asset Morningstar 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.