Correlation Between RBC Bearings and Getty Realty
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Getty Realty 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 Getty Realty 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 Getty Realty, you can compare the effects of market volatilities on RBC Bearings and Getty Realty 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 Getty Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Getty Realty.
Diversification Opportunities for RBC Bearings and Getty Realty
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Getty is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Getty Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Realty 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 Getty Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Realty has no effect on the direction of RBC Bearings i.e., RBC Bearings and Getty Realty go up and down completely randomly.
Pair Corralation between RBC Bearings and Getty Realty
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.95 times more return on investment than Getty Realty. However, RBC Bearings is 1.95 times more volatile than Getty Realty. It trades about 0.13 of its potential returns per unit of risk. Getty Realty is currently generating about 0.11 per unit of risk. If you would invest 29,785 in RBC Bearings Incorporated on August 30, 2024 and sell it today you would earn a total of 4,181 from holding RBC Bearings Incorporated or generate 14.04% 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. Getty Realty
Performance |
| Timeline |
| RBC Bearings |
| Getty Realty |
RBC Bearings and Getty Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Getty Realty
The main advantage of trading using opposite RBC Bearings and Getty Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Getty Realty 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 Getty Realty will offset losses from the drop in Getty Realty's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Getty Realty vs. Regency Centers | Getty Realty vs. Site Centers Corp | Getty Realty vs. Brixmor Property | Getty Realty vs. Tanger Factory Outlet |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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