Royal Bank of Canada is considering investing as much as $1 billion in a hedge fund spun off from its U.S. proprietary-trading business, according to two people with knowledge of the matter. The new firm will be called Taursa Capital Partners and open by the end of the year. The bank has been reviewing possibilities for its New York-based global arbitrage and trading unit since the U.S. released a final version in December of the Volcker Rule, which restricts banks’ ability to trade with their own money. Royal Bank would invest in the new fund without retaining an ownership stake. The spinoff would be one of the biggest since Peter Muller, who ran a trading group at Morgan Stanley, left with his team in 2012 to start hedge-fund firm, PDT Partners LLC in New York. Taursa is an amalgam of taurus and ursa, Latin names for bull and bear, as a salute to the fund’s strategy of being able to perform in both rising and falling markets, the people said.