Correlation Between Bank Central and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and RBC Bearings, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and RBC Bearings.
Diversification Opportunities for Bank Central and RBC Bearings
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and RBC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and RBC Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and RBC Bearings go up and down completely randomly.
Pair Corralation between Bank Central and RBC Bearings
Assuming the 90 days horizon Bank Central Asia is expected to generate 1.15 times more return on investment than RBC Bearings. However, Bank Central is 1.15 times more volatile than RBC Bearings. It trades about -0.04 of its potential returns per unit of risk. RBC Bearings is currently generating about -0.12 per unit of risk. If you would invest 1,660 in Bank Central Asia on September 2, 2024 and sell it today you would lose (79.00) from holding Bank Central Asia or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Bank Central Asia vs. RBC Bearings
Performance |
| Timeline |
| Bank Central Asia |
| RBC Bearings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank Central and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and RBC Bearings
The main advantage of trading using opposite Bank Central and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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