Correlation Between RBC Bearings and Nexxen International
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Nexxen International 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 Nexxen International 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 Nexxen International, you can compare the effects of market volatilities on RBC Bearings and Nexxen International 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 Nexxen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Nexxen International.
Diversification Opportunities for RBC Bearings and Nexxen International
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Nexxen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of RBC Bearings i.e., RBC Bearings and Nexxen International go up and down completely randomly.
Pair Corralation between RBC Bearings and Nexxen International
Considering the 90-day investment horizon RBC Bearings is expected to generate 1.11 times less return on investment than Nexxen International. But when comparing it to its historical volatility, RBC Bearings Incorporated is 2.34 times less risky than Nexxen International. It trades about 0.34 of its potential returns per unit of risk. Nexxen International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Nexxen International on August 31, 2024 and sell it today you would earn a total of 151.00 from holding Nexxen International or generate 18.13% 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. Nexxen International
Performance |
| Timeline |
| RBC Bearings |
| Nexxen International |
RBC Bearings and Nexxen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Nexxen International
The main advantage of trading using opposite RBC Bearings and Nexxen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Nexxen International 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 Nexxen International will offset losses from the drop in Nexxen International's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Nexxen International vs. Mirriad Advertising plc | Nexxen International vs. INEO Tech Corp | Nexxen International vs. Marchex | Nexxen International vs. Entravision Communications |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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