Correlation Between RBC Bearings and NETGEAR
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on RBC Bearings and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and NETGEAR.
Diversification Opportunities for RBC Bearings and NETGEAR
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between RBC and NETGEAR is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of RBC Bearings i.e., RBC Bearings and NETGEAR go up and down completely randomly.
Pair Corralation between RBC Bearings and NETGEAR
Considering the 90-day investment horizon RBC Bearings is expected to generate 2.85 times less return on investment than NETGEAR. But when comparing it to its historical volatility, RBC Bearings Incorporated is 2.01 times less risky than NETGEAR. It trades about 0.07 of its potential returns per unit of risk. NETGEAR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,432 in NETGEAR on November 3, 2024 and sell it today you would earn a total of 1,333 from holding NETGEAR or generate 93.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. NETGEAR
Performance |
| Timeline |
| RBC Bearings |
| NETGEAR |
RBC Bearings and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and NETGEAR
The main advantage of trading using opposite RBC Bearings and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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