Correlation Between Alternative Investment and RBC Bearings

Can any of the company-specific risk be diversified away by investing in both Alternative Investment and RBC Bearings 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 Alternative Investment and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alternative Investment and RBC Bearings Incorporated, you can compare the effects of market volatilities on Alternative Investment and RBC Bearings 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 Alternative Investment with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and RBC Bearings.

Diversification Opportunities for Alternative Investment and RBC Bearings

0.0

Correlation Coefficient

Alternative Investment  RBC Bearings

Pay attention - limited upside

The 3 months correlation between Alternative and RBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Alternative Investment 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 Alternative Investment are associated (or correlated) with RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Alternative Investment i.e., Alternative Investment and RBC Bearings go up and down completely randomly.

Pair Corralation between Alternative Investment and RBC Bearings

If you would invest  25,177  in RBC Bearings Incorporated on February 13, 2024 and sell it today you would earn a total of  1,979  from holding RBC Bearings Incorporated or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alternative Investment  vs.  RBC Bearings Incorporated

Alternative Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alternative Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Alternative Investment is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

RBC Bearings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, RBC Bearings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alternative Investment and RBC Bearings

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

The idea behind Alternative Investment and RBC Bearings Incorporated 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.