Correlation Between RBC Bearings and American Eagle
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on RBC Bearings and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and American Eagle.
Diversification Opportunities for RBC Bearings and American Eagle
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RBC and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of RBC Bearings i.e., RBC Bearings and American Eagle go up and down completely randomly.
Pair Corralation between RBC Bearings and American Eagle
Considering the 90-day investment horizon RBC Bearings is expected to generate 1.32 times less return on investment than American Eagle. But when comparing it to its historical volatility, RBC Bearings Incorporated is 1.49 times less risky than American Eagle. It trades about 0.09 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,130 in American Eagle Outfitters on September 4, 2024 and sell it today you would earn a total of 863.00 from holding American Eagle Outfitters or generate 76.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. American Eagle Outfitters
Performance |
| Timeline |
| RBC Bearings |
| American Eagle Outfitters |
RBC Bearings and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and American Eagle
The main advantage of trading using opposite RBC Bearings and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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