Correlation Between RBC Bearings and Hawkins
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on RBC Bearings and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Hawkins.
Diversification Opportunities for RBC Bearings and Hawkins
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RBC and Hawkins is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of RBC Bearings i.e., RBC Bearings and Hawkins go up and down completely randomly.
Pair Corralation between RBC Bearings and Hawkins
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.72 times more return on investment than Hawkins. However, RBC Bearings Incorporated is 1.39 times less risky than Hawkins. It trades about 0.32 of its potential returns per unit of risk. Hawkins is currently generating about 0.2 per unit of risk. If you would invest 28,857 in RBC Bearings Incorporated on August 29, 2024 and sell it today you would earn a total of 5,150 from holding RBC Bearings Incorporated or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Hawkins
Performance |
| Timeline |
| RBC Bearings |
| Hawkins |
RBC Bearings and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Hawkins
The main advantage of trading using opposite RBC Bearings and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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