Correlation Between State Street and Rbc Global

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

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

Diversification Opportunities for State Street and Rbc Global

0.99

Correlation Coefficient

State Street  Rbc Global

No risk reduction

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

Pair Corralation between State Street and Rbc Global

Assuming the 90 days horizon State Street Smallmid is expected to generate 1.5 times more return on investment than Rbc Global. However, State Street is 1.5 times more volatile than Rbc Global Equity. It trades about 0.21 of its potential returns per unit of risk. Rbc Global Equity is currently generating about 0.25 per unit of risk. If you would invest  29,473  in State Street Smallmid on May 2, 2025 and sell it today you would earn a total of  3,873  from holding State Street Smallmid or generate 13.14% return on investment over 90 days.

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

State Street Smallmid  vs.  Rbc Global Equity

State Street Smallmid

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Smallmid are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, State Street showed solid returns over the last few months and may actually be approaching a breakup point.

Rbc Global Equity

Risk-Adjusted Performance

Solid

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

Pair Trading with State Street and Rbc Global

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

The idea behind State Street Smallmid and Rbc Global 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.