Correlation Between RBC Bearings and Starbucks
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on RBC Bearings and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Starbucks.
Diversification Opportunities for RBC Bearings and Starbucks
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RBC and Starbucks is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of RBC Bearings i.e., RBC Bearings and Starbucks go up and down completely randomly.
Pair Corralation between RBC Bearings and Starbucks
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.17 times more return on investment than Starbucks. However, RBC Bearings is 1.17 times more volatile than Starbucks. It trades about 0.35 of its potential returns per unit of risk. Starbucks is currently generating about 0.39 per unit of risk. If you would invest 30,032 in RBC Bearings Incorporated on November 5, 2024 and sell it today you would earn a total of 4,843 from holding RBC Bearings Incorporated or generate 16.13% 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. Starbucks
Performance |
| Timeline |
| RBC Bearings |
| Starbucks |
RBC Bearings and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Starbucks
The main advantage of trading using opposite RBC Bearings and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza Common | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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