Correlation Between Royal Bank and Accord Financial

Can any of the company-specific risk be diversified away by investing in both Royal Bank and Accord 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 Accord 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 Accord Financial Corp, you can compare the effects of market volatilities on Royal Bank and Accord 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 Accord Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Accord Financial.

Diversification Opportunities for Royal Bank and Accord Financial

-0.8

Correlation Coefficient

Royal Bank  Accord Financial

Pay attention - limited upside

The 3 months correlation between Royal and Accord is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Accord Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accord Financial Corp 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 Accord Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accord Financial Corp has no effect on the direction of Royal Bank i.e., Royal Bank and Accord Financial go up and down completely randomly.

Pair Corralation between Royal Bank and Accord Financial

Assuming the 90 days trading horizon Royal Bank of is expected to generate 1.18 times more return on investment than Accord Financial. However, Royal Bank is 1.18 times more volatile than Accord Financial Corp. It trades about 0.24 of its potential returns per unit of risk. Accord Financial Corp is currently generating about -0.47 per unit of risk. If you would invest  2,253  in Royal Bank of on February 14, 2024 and sell it today you would earn a total of  173.00  from holding Royal Bank of or generate 7.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Royal Bank of  vs.  Accord Financial Corp

Royal Bank

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Royal Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak technical indicators, Royal Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Accord Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accord Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Royal Bank and Accord Financial

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

The idea behind Royal Bank of and Accord Financial Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.