Correlation Between RBC Bearings and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing, you can compare the effects of market volatilities on RBC Bearings and Modine Manufacturing 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 Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Modine Manufacturing.
Diversification Opportunities for RBC Bearings and Modine Manufacturing
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RBC and Modine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing 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 Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of RBC Bearings i.e., RBC Bearings and Modine Manufacturing go up and down completely randomly.
Pair Corralation between RBC Bearings and Modine Manufacturing
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.35 times more return on investment than Modine Manufacturing. However, RBC Bearings Incorporated is 2.87 times less risky than Modine Manufacturing. It trades about 0.19 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.03 per unit of risk. If you would invest 31,569 in RBC Bearings Incorporated on September 14, 2024 and sell it today you would earn a total of 1,498 from holding RBC Bearings Incorporated or generate 4.75% 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. Modine Manufacturing
Performance |
| Timeline |
| RBC Bearings |
| Modine Manufacturing |
RBC Bearings and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Modine Manufacturing
The main advantage of trading using opposite RBC Bearings and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Modine Manufacturing vs. Ford Motor | Modine Manufacturing vs. General Motors | Modine Manufacturing vs. Goodyear Tire Rubber | Modine Manufacturing vs. Li Auto |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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