Correlation Between Hawkins and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Hawkins 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 Hawkins and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and RBC Bearings Incorporated, you can compare the effects of market volatilities on Hawkins 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 Hawkins with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and RBC Bearings.
Diversification Opportunities for Hawkins and RBC Bearings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hawkins and RBC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and RBC Bearings go up and down completely randomly.
Pair Corralation between Hawkins and RBC Bearings
Given the investment horizon of 90 days Hawkins is expected to generate 1.14 times less return on investment than RBC Bearings. In addition to that, Hawkins is 1.39 times more volatile than RBC Bearings Incorporated. It trades about 0.2 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.32 per unit of volatility. If you would invest 28,857 in RBC Bearings Incorporated on August 29, 2024 and sell it today you would earn a total of 5,150 from holding RBC Bearings Incorporated or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Hawkins |
| RBC Bearings |
Hawkins and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and RBC Bearings
The main advantage of trading using opposite Hawkins and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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