Correlation Between RBC Bearings and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Estee Lauder 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 Estee Lauder 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 Estee Lauder Companies, you can compare the effects of market volatilities on RBC Bearings and Estee Lauder 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 Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Estee Lauder.
Diversification Opportunities for RBC Bearings and Estee Lauder
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RBC and Estee is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies 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 Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of RBC Bearings i.e., RBC Bearings and Estee Lauder go up and down completely randomly.
Pair Corralation between RBC Bearings and Estee Lauder
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.46 times more return on investment than Estee Lauder. However, RBC Bearings Incorporated is 2.17 times less risky than Estee Lauder. It trades about 0.33 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.15 per unit of risk. If you would invest 28,857 in RBC Bearings Incorporated on August 28, 2024 and sell it today you would earn a total of 5,021 from holding RBC Bearings Incorporated or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Estee Lauder Companies
Performance |
| Timeline |
| RBC Bearings |
| Estee Lauder Companies |
RBC Bearings and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Estee Lauder
The main advantage of trading using opposite RBC Bearings and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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