Correlation Between RBC Bearings and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on RBC Bearings and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Compania Cervecerias.
Diversification Opportunities for RBC Bearings and Compania Cervecerias
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between RBC and Compania is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of RBC Bearings i.e., RBC Bearings and Compania Cervecerias go up and down completely randomly.
Pair Corralation between RBC Bearings and Compania Cervecerias
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to under-perform the Compania Cervecerias. But the stock apears to be less risky and, when comparing its historical volatility, RBC Bearings Incorporated is 1.14 times less risky than Compania Cervecerias. The stock trades about -0.49 of its potential returns per unit of risk. The Compania Cervecerias Unidas is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,105 in Compania Cervecerias Unidas on September 24, 2024 and sell it today you would earn a total of 62.00 from holding Compania Cervecerias Unidas or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| RBC Bearings |
| Compania Cervecerias |
RBC Bearings and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Compania Cervecerias
The main advantage of trading using opposite RBC Bearings and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Toro Co | RBC Bearings vs. Timken Company | RBC Bearings vs. Eastern Co |
| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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