Correlation Between RBC Bearings and Independence Realty
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Independence 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 Independence 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 Independence Realty Trust, you can compare the effects of market volatilities on RBC Bearings and Independence 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Independence Realty.
Diversification Opportunities for RBC Bearings and Independence Realty
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBC and Independence is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of RBC Bearings i.e., RBC Bearings and Independence Realty go up and down completely randomly.
Pair Corralation between RBC Bearings and Independence Realty
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.76 times more return on investment than Independence Realty. However, RBC Bearings is 1.76 times more volatile than Independence Realty Trust. It trades about 0.34 of its potential returns per unit of risk. Independence Realty Trust is currently generating about 0.38 per unit of risk. If you would invest 28,583 in RBC Bearings Incorporated on August 30, 2024 and sell it today you would earn a total of 5,383 from holding RBC Bearings Incorporated or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Independence Realty Trust
Performance |
| Timeline |
| RBC Bearings |
| Independence Realty Trust |
RBC Bearings and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Independence Realty
The main advantage of trading using opposite RBC Bearings and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Independence 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 Independence Realty will offset losses from the drop in Independence Realty's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Independence Realty vs. BRT Realty Trust | Independence Realty vs. Nexpoint Residential Trust | Independence Realty vs. Veris Residential | Independence Realty vs. Clipper Realty |
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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