Correlation Between Royal Bank and Olympia Financial

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

By analyzing existing cross correlation between Royal Bank of and Olympia Financial Group, you can compare the effects of market volatilities on Royal Bank and Olympia Financial 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 Royal Bank with a short position of Olympia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Olympia Financial.

Diversification Opportunities for Royal Bank and Olympia Financial

0.85

Correlation Coefficient

Royal Bank  Olympia Financial

Very poor diversification

The 3 months correlation between Royal and Olympia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Olympia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympia Financial and Royal Bank 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 Royal Bank of are associated (or correlated) with Olympia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympia Financial has no effect on the direction of Royal Bank i.e., Royal Bank and Olympia Financial go up and down completely randomly.

Pair Corralation between Royal Bank and Olympia Financial

Assuming the 90 days trading horizon Royal Bank is expected to generate 9.0 times less return on investment than Olympia Financial. But when comparing it to its historical volatility, Royal Bank of is 6.63 times less risky than Olympia Financial. It trades about 0.2 of its potential returns per unit of risk. Olympia Financial Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  10,008  in Olympia Financial Group on May 7, 2025 and sell it today you would earn a total of  2,392  from holding Olympia Financial Group or generate 23.9% return on investment over 90 days.

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

Royal Bank of  vs.  Olympia Financial Group

Royal Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Royal Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Olympia Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Olympia Financial Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Olympia Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royal Bank and Olympia Financial

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

The idea behind Royal Bank of and Olympia Financial Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.