Correlation Between Rbc Emerging and Vanguard Diversified

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

By analyzing existing cross correlation between Rbc Emerging Markets and Vanguard Diversified Equity, you can compare the effects of market volatilities on Rbc Emerging and Vanguard Diversified 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 Emerging with a short position of Vanguard Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Emerging and Vanguard Diversified.

Diversification Opportunities for Rbc Emerging and Vanguard Diversified

0.99

Correlation Coefficient

Rbc Emerging  Vanguard Diversified

No risk reduction

The 3 months correlation between Rbc and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Emerging Markets and Vanguard Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Diversified and Rbc Emerging 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 Emerging Markets are associated (or correlated) with Vanguard Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Diversified has no effect on the direction of Rbc Emerging i.e., Rbc Emerging and Vanguard Diversified go up and down completely randomly.

Pair Corralation between Rbc Emerging and Vanguard Diversified

Assuming the 90 days horizon Rbc Emerging is expected to generate 1.23 times less return on investment than Vanguard Diversified. But when comparing it to its historical volatility, Rbc Emerging Markets is 1.01 times less risky than Vanguard Diversified. It trades about 0.2 of its potential returns per unit of risk. Vanguard Diversified Equity is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,835  in Vanguard Diversified Equity on May 6, 2025 and sell it today you would earn a total of  624.00  from holding Vanguard Diversified Equity or generate 12.91% return on investment over 90 days.

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

Rbc Emerging Markets  vs.  Vanguard Diversified Equity

Rbc Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Emerging Markets are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Diversified

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Diversified Equity are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Diversified may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Rbc Emerging and Vanguard Diversified

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

The idea behind Rbc Emerging Markets and Vanguard Diversified 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.