Correlation Between Jeld Wen and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Jeld Wen 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 Jeld Wen and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeld Wen Holding and RBC Bearings Incorporated, you can compare the effects of market volatilities on Jeld Wen 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 Jeld Wen with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and RBC Bearings.
Diversification Opportunities for Jeld Wen and RBC Bearings
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Jeld and RBC is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Jeld Wen 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 Jeld Wen Holding 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 Jeld Wen i.e., Jeld Wen and RBC Bearings go up and down completely randomly.
Pair Corralation between Jeld Wen and RBC Bearings
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the RBC Bearings. In addition to that, Jeld Wen is 3.22 times more volatile than RBC Bearings Incorporated. It trades about -0.12 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.37 per unit of volatility. If you would invest 28,035 in RBC Bearings Incorporated on September 1, 2024 and sell it today you would earn a total of 5,476 from holding RBC Bearings Incorporated or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeld Wen Holding vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Jeld Wen Holding |
| RBC Bearings |
Jeld Wen and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeld Wen and RBC Bearings
The main advantage of trading using opposite Jeld Wen and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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.| Jeld Wen vs. Trex Company | Jeld Wen vs. Armstrong World Industries | Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Apogee Enterprises |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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