Correlation Between RBC Bearings and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Planet Fitness 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 Planet Fitness 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 Planet Fitness, you can compare the effects of market volatilities on RBC Bearings and Planet Fitness 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 Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Planet Fitness.
Diversification Opportunities for RBC Bearings and Planet Fitness
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RBC and Planet is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness 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 Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of RBC Bearings i.e., RBC Bearings and Planet Fitness go up and down completely randomly.
Pair Corralation between RBC Bearings and Planet Fitness
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.79 times more return on investment than Planet Fitness. However, RBC Bearings Incorporated is 1.27 times less risky than Planet Fitness. It trades about 0.06 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.03 per unit of risk. If you would invest 22,370 in RBC Bearings Incorporated on September 3, 2024 and sell it today you would earn a total of 11,141 from holding RBC Bearings Incorporated or generate 49.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Planet Fitness
Performance |
| Timeline |
| RBC Bearings |
| Planet Fitness |
RBC Bearings and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Planet Fitness
The main advantage of trading using opposite RBC Bearings and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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