Correlation Between RBC Bearings and Chemtrade Logistics
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Chemtrade Logistics 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 Chemtrade Logistics 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 Chemtrade Logistics Income, you can compare the effects of market volatilities on RBC Bearings and Chemtrade Logistics 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 Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Chemtrade Logistics.
Diversification Opportunities for RBC Bearings and Chemtrade Logistics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Chemtrade is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics 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 Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of RBC Bearings i.e., RBC Bearings and Chemtrade Logistics go up and down completely randomly.
Pair Corralation between RBC Bearings and Chemtrade Logistics
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.21 times more return on investment than Chemtrade Logistics. However, RBC Bearings is 1.21 times more volatile than Chemtrade Logistics Income. It trades about 0.34 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.16 per unit of risk. If you would invest 29,781 in RBC Bearings Incorporated on November 3, 2024 and sell it today you would earn a total of 5,094 from holding RBC Bearings Incorporated or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Chemtrade Logistics Income
Performance |
| Timeline |
| RBC Bearings |
| Chemtrade Logistics |
RBC Bearings and Chemtrade Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Chemtrade Logistics
The main advantage of trading using opposite RBC Bearings and Chemtrade Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Chemtrade Logistics 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 Chemtrade Logistics will offset losses from the drop in Chemtrade Logistics' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Chemtrade Logistics vs. PepsiCo | Chemtrade Logistics vs. Turning Point Brands | Chemtrade Logistics vs. The Coca Cola | Chemtrade Logistics vs. El Pollo Loco |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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