Correlation Between RBC Bearings and Bellevue Life

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

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

Diversification Opportunities for RBC Bearings and Bellevue Life

0.35

Correlation Coefficient

RBC Bearings  Bellevue Life

Weak diversification

The 3 months correlation between RBC and Bellevue is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Bellevue Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Life Sciences and RBC Bearings 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 RBC Bearings Incorporated are associated (or correlated) with Bellevue Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Life Sciences has no effect on the direction of RBC Bearings i.e., RBC Bearings and Bellevue Life go up and down completely randomly.

Pair Corralation between RBC Bearings and Bellevue Life

Considering the 90-day investment horizon RBC Bearings is expected to generate 27.98 times less return on investment than Bellevue Life. But when comparing it to its historical volatility, RBC Bearings Incorporated is 14.82 times less risky than Bellevue Life. It trades about 0.15 of its potential returns per unit of risk. Bellevue Life Sciences is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Bellevue Life Sciences on September 12, 2024 and sell it today you would earn a total of  2.50  from holding Bellevue Life Sciences or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.16%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Bellevue Life Sciences

RBC Bearings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bellevue Life Sciences

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Bellevue Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak fundamental indicators, Bellevue Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Bearings and Bellevue Life

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

The idea behind RBC Bearings Incorporated and Bellevue Life Sciences 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.