Correlation Between RBC Bearings and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality Holdings, you can compare the effects of market volatilities on RBC Bearings and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and RCI Hospitality.
Diversification Opportunities for RBC Bearings and RCI Hospitality
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RBC and RCI is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of RBC Bearings i.e., RBC Bearings and RCI Hospitality go up and down completely randomly.
Pair Corralation between RBC Bearings and RCI Hospitality
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.73 times more return on investment than RCI Hospitality. However, RBC Bearings Incorporated is 1.37 times less risky than RCI Hospitality. It trades about 0.08 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.03 per unit of risk. If you would invest 22,037 in RBC Bearings Incorporated on September 12, 2024 and sell it today you would earn a total of 11,217 from holding RBC Bearings Incorporated or generate 50.9% 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. RCI Hospitality Holdings
Performance |
| Timeline |
| RBC Bearings |
| RCI Hospitality Holdings |
RBC Bearings and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and RCI Hospitality
The main advantage of trading using opposite RBC Bearings and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| RBC Bearings vs. Kennametal | RBC Bearings vs. Snap On | RBC Bearings vs. Eastern Co | RBC Bearings vs. Lincoln Electric Holdings |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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