Correlation Between RBC Bearings and Lincoln National
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Lincoln National 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 Lincoln National 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 Lincoln National, you can compare the effects of market volatilities on RBC Bearings and Lincoln National 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 Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Lincoln National.
Diversification Opportunities for RBC Bearings and Lincoln National
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RBC and Lincoln is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of RBC Bearings i.e., RBC Bearings and Lincoln National go up and down completely randomly.
Pair Corralation between RBC Bearings and Lincoln National
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 3.43 times more return on investment than Lincoln National. However, RBC Bearings is 3.43 times more volatile than Lincoln National. It trades about 0.1 of its potential returns per unit of risk. Lincoln National is currently generating about 0.01 per unit of risk. If you would invest 26,154 in RBC Bearings Incorporated on November 3, 2024 and sell it today you would earn a total of 8,721 from holding RBC Bearings Incorporated or generate 33.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Lincoln National
Performance |
| Timeline |
| RBC Bearings |
| Lincoln National |
RBC Bearings and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Lincoln National
The main advantage of trading using opposite RBC Bearings and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Lincoln National vs. EMCORE | Lincoln National vs. Sable Offshore Corp | Lincoln National vs. Cabo Drilling Corp | Lincoln National vs. Nordic Semiconductor ASA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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