Correlation Between RBC Bearings and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on RBC Bearings and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Scandinavian Tobacco.
Diversification Opportunities for RBC Bearings and Scandinavian Tobacco
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RBC and Scandinavian is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of RBC Bearings i.e., RBC Bearings and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between RBC Bearings and Scandinavian Tobacco
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.03 times more return on investment than Scandinavian Tobacco. However, RBC Bearings is 1.03 times more volatile than Scandinavian Tobacco Group. It trades about 0.05 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.03 per unit of risk. If you would invest 20,906 in RBC Bearings Incorporated on September 24, 2024 and sell it today you would earn a total of 9,722 from holding RBC Bearings Incorporated or generate 46.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| RBC Bearings |
| Scandinavian Tobacco |
RBC Bearings and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Scandinavian Tobacco
The main advantage of trading using opposite RBC Bearings and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Toro Co | RBC Bearings vs. Timken Company | RBC Bearings vs. Eastern Co |
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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