Correlation Between Merck and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and RBC Bearings, you can compare the effects of market volatilities on Merck 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 Merck with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and RBC Bearings.
Diversification Opportunities for Merck and RBC Bearings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and RBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and RBC Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Merck 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 Merck Company 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 Merck i.e., Merck and RBC Bearings go up and down completely randomly.
Pair Corralation between Merck and RBC Bearings
If you would invest (100.00) in RBC Bearings on November 29, 2024 and sell it today you would earn a total of 100.00 from holding RBC Bearings or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merck Company vs. RBC Bearings
Performance |
| Timeline |
| Merck Company |
| RBC Bearings |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Merck and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and RBC Bearings
The main advantage of trading using opposite Merck and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.The idea behind Merck Company and RBC Bearings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| RBC Bearings vs. Old National Bancorp | RBC Bearings vs. Pinnacle Financial Partners | RBC Bearings vs. CIT Group Preferred | RBC Bearings vs. Texas Capital Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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