Correlation Between RBC Bearings and Snap On
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Snap On 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 Snap On 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 Snap on Incorporated, you can compare the effects of market volatilities on RBC Bearings and Snap On 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 Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Snap On.
Diversification Opportunities for RBC Bearings and Snap On
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBC and Snap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap on 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 Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap on has no effect on the direction of RBC Bearings i.e., RBC Bearings and Snap On go up and down completely randomly.
Pair Corralation between RBC Bearings and Snap On
Assuming the 90 days horizon RBC Bearings is expected to generate 1.66 times less return on investment than Snap On. In addition to that, RBC Bearings is 1.05 times more volatile than Snap on Incorporated. It trades about 0.11 of its total potential returns per unit of risk. Snap on Incorporated is currently generating about 0.18 per unit of volatility. If you would invest 24,330 in Snap on Incorporated on September 5, 2024 and sell it today you would earn a total of 10,510 from holding Snap on Incorporated or generate 43.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Snap on Incorporated
Performance |
| Timeline |
| RBC Bearings |
| Snap on |
RBC Bearings and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Snap On
The main advantage of trading using opposite RBC Bearings and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Snap On 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 Snap On will offset losses from the drop in Snap On's long position.| RBC Bearings vs. Snap on Incorporated | RBC Bearings vs. Stanley Black Decker | RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. AB SKF |
| Snap On vs. Air Transport Services | Snap On vs. Texas Roadhouse | Snap On vs. Lion One Metals | Snap On vs. Gaztransport Technigaz SA |
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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