Correlation Between RBC Bearings and Boston Properties
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Boston Properties 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 Boston Properties 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 Boston Properties, you can compare the effects of market volatilities on RBC Bearings and Boston Properties 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 Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Boston Properties.
Diversification Opportunities for RBC Bearings and Boston Properties
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between RBC and Boston is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of RBC Bearings i.e., RBC Bearings and Boston Properties go up and down completely randomly.
Pair Corralation between RBC Bearings and Boston Properties
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.8 times more return on investment than Boston Properties. However, RBC Bearings Incorporated is 1.25 times less risky than Boston Properties. It trades about 0.19 of its potential returns per unit of risk. Boston Properties is currently generating about -0.07 per unit of risk. If you would invest 32,008 in RBC Bearings Incorporated on September 12, 2024 and sell it today you would earn a total of 1,612 from holding RBC Bearings Incorporated or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Boston Properties
Performance |
| Timeline |
| RBC Bearings |
| Boston Properties |
RBC Bearings and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Boston Properties
The main advantage of trading using opposite RBC Bearings and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Boston Properties 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 Boston Properties will offset losses from the drop in Boston Properties' long position.| RBC Bearings vs. Kennametal | RBC Bearings vs. Snap On | RBC Bearings vs. Eastern Co | RBC Bearings vs. Lincoln Electric Holdings |
| Boston Properties vs. SL Green Realty | Boston Properties vs. Douglas Emmett | Boston Properties vs. Kilroy Realty Corp | Boston Properties vs. Alexandria Real Estate |
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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