Correlation Between RBC Bearings and Acco Brands
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Acco Brands 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 RBC Bearings and Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Bearings Incorporated and Acco Brands, you can compare the effects of market volatilities on RBC Bearings and Acco Brands 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 RBC Bearings with a short position of Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Acco Brands.
Diversification Opportunities for RBC Bearings and Acco Brands
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBC and Acco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and RBC Bearings 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 RBC Bearings Incorporated are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of RBC Bearings i.e., RBC Bearings and Acco Brands go up and down completely randomly.
Pair Corralation between RBC Bearings and Acco Brands
Considering the 90-day investment horizon RBC Bearings is expected to generate 1.2 times less return on investment than Acco Brands. But when comparing it to its historical volatility, RBC Bearings Incorporated is 1.17 times less risky than Acco Brands. It trades about 0.33 of its potential returns per unit of risk. Acco Brands is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 488.00 in Acco Brands on August 28, 2024 and sell it today you would earn a total of 108.00 from holding Acco Brands or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Acco Brands
Performance |
| Timeline |
| RBC Bearings |
| Acco Brands |
RBC Bearings and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Acco Brands
The main advantage of trading using opposite RBC Bearings and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Acco Brands vs. Park Electrochemical | Acco Brands vs. Innovative Solutions and | Acco Brands vs. Curtiss Wright | Acco Brands vs. National Presto Industries |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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