Correlation Between RBC Bearings and SL Green
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and SL Green 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 SL Green 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 SL Green Realty, you can compare the effects of market volatilities on RBC Bearings and SL Green 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 SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and SL Green.
Diversification Opportunities for RBC Bearings and SL Green
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RBC and SLG is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of RBC Bearings i.e., RBC Bearings and SL Green go up and down completely randomly.
Pair Corralation between RBC Bearings and SL Green
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.68 times more return on investment than SL Green. However, RBC Bearings Incorporated is 1.48 times less risky than SL Green. It trades about 0.19 of its potential returns per unit of risk. SL Green Realty is currently generating about -0.23 per unit of risk. If you would invest 32,008 in RBC Bearings Incorporated on September 12, 2024 and sell it today you would earn a total of 1,612 from holding RBC Bearings Incorporated or generate 5.04% 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. SL Green Realty
Performance |
| Timeline |
| RBC Bearings |
| SL Green Realty |
RBC Bearings and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and SL Green
The main advantage of trading using opposite RBC Bearings and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.| RBC Bearings vs. Kennametal | RBC Bearings vs. Snap On | RBC Bearings vs. Eastern Co | RBC Bearings vs. Lincoln Electric Holdings |
| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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