Correlation Between RBC Bearings and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Bausch Lomb 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 Bausch Lomb 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 Bausch Lomb Corp, you can compare the effects of market volatilities on RBC Bearings and Bausch Lomb 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 Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Bausch Lomb.
Diversification Opportunities for RBC Bearings and Bausch Lomb
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RBC and Bausch is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp 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 Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of RBC Bearings i.e., RBC Bearings and Bausch Lomb go up and down completely randomly.
Pair Corralation between RBC Bearings and Bausch Lomb
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.42 times more return on investment than Bausch Lomb. However, RBC Bearings is 1.42 times more volatile than Bausch Lomb Corp. It trades about 0.31 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.1 per unit of risk. If you would invest 28,857 in RBC Bearings Incorporated on August 27, 2024 and sell it today you would earn a total of 4,825 from holding RBC Bearings Incorporated or generate 16.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Bausch Lomb Corp
Performance |
| Timeline |
| RBC Bearings |
| Bausch Lomb Corp |
RBC Bearings and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Bausch Lomb
The main advantage of trading using opposite RBC Bearings and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Bausch Lomb 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 Bausch Lomb will offset losses from the drop in Bausch Lomb's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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