Correlation Between Apogee Enterprises and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises 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 Apogee Enterprises and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and RBC Bearings Incorporated, you can compare the effects of market volatilities on Apogee Enterprises 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 Apogee Enterprises with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and RBC Bearings.
Diversification Opportunities for Apogee Enterprises and RBC Bearings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apogee and RBC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises i.e., Apogee Enterprises and RBC Bearings go up and down completely randomly.
Pair Corralation between Apogee Enterprises and RBC Bearings
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.66 times less return on investment than RBC Bearings. But when comparing it to its historical volatility, Apogee Enterprises is 1.28 times less risky than RBC Bearings. It trades about 0.25 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 28,857 in RBC Bearings Incorporated on August 28, 2024 and sell it today you would earn a total of 5,021 from holding RBC Bearings Incorporated or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apogee Enterprises vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Apogee Enterprises |
| RBC Bearings |
Apogee Enterprises and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and RBC Bearings
The main advantage of trading using opposite Apogee Enterprises and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises 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.| Apogee Enterprises vs. Trex Company | Apogee Enterprises vs. Travis Perkins PLC | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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