70.56 -0.1 (-0.14%) Sell

The party never started for RY investors as it significantly underperforms

13 min read

ROYAL BANK OF CANADA (Foreign) is a falling knife that can bleed you if you catch it on Thursday. It returned -0.14% to close at 70.56. It is currently trading -18% below it's 52 week high of 86.75.

[Themes containing RY]

RY is currently in a down trend. Over the last three months 2 bearish signals have generated a profit of +7.9% for investors.


RY has been underperforming the SP500 index in recent time, after having outperformed till 17 Feb, 2017. Over the last 2 years 11 months and 9 days, RY outperformed the SP500 index on 51% days.

RY returned losses on 66% days in the last three months. During this time, it delivered on average -0.18% per day. It delivered it's worst daily return of -3.63%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 14 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +2.48% to investors. This was followed by a bearish trend that started on 2 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -6.5% of investor capital.

On monthly basis, RY delivered losses in more months over the last year, than profits. RY delivered profits less regularly than SP500 index. RY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -9.95% compared to -7.28% returned by SP500 index in Oct 2018. RY had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -11.5%. It is interesting to note that both RY and SP500 index significantly outperform during months when quarterly/annual results are announced.

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.
-- Ayn Rand

RY is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in RY's volatility from 17 Sep, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that RY has significant positive skewness in it's return distribution. This indicates that investors can expect RY to recover from drawdowns quickly. Which makes RY a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

RY has more chance of extreme outcomes than the SP500 index. Therefore, RY must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than RY.

Based on your interest in RY you may find it interesting to know that APRN has shown remarkable performance and deserves to be on every investors' watchlist.

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