Correlation Between Canlan Ice and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and RBC Bearings Incorporated, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and RBC Bearings.
Diversification Opportunities for Canlan Ice and RBC Bearings
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canlan and RBC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and RBC Bearings go up and down completely randomly.
Pair Corralation between Canlan Ice and RBC Bearings
Assuming the 90 days horizon Canlan Ice is expected to generate 8.99 times less return on investment than RBC Bearings. But when comparing it to its historical volatility, Canlan Ice Sports is 14.63 times less risky than RBC Bearings. It trades about 0.14 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21,314 in RBC Bearings Incorporated on August 31, 2024 and sell it today you would earn a total of 12,197 from holding RBC Bearings Incorporated or generate 57.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Canlan Ice Sports vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Canlan Ice Sports |
| RBC Bearings |
Canlan Ice and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and RBC Bearings
The main advantage of trading using opposite Canlan Ice and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. WiMi Hologram Cloud | Canlan Ice vs. Vita Coco | Canlan Ice vs. Constellation Brands Class | Canlan Ice vs. Radcom |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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