Correlation Between RBC Bearings and Stanley Black
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Stanley Black 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 Stanley Black 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 Stanley Black Decker, you can compare the effects of market volatilities on RBC Bearings and Stanley Black 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 Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Stanley Black.
Diversification Opportunities for RBC Bearings and Stanley Black
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between RBC and Stanley is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker 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 Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of RBC Bearings i.e., RBC Bearings and Stanley Black go up and down completely randomly.
Pair Corralation between RBC Bearings and Stanley Black
Considering the 90-day investment horizon RBC Bearings is expected to generate 1.5 times less return on investment than Stanley Black. In addition to that, RBC Bearings is 1.06 times more volatile than Stanley Black Decker. It trades about 0.28 of its total potential returns per unit of risk. Stanley Black Decker is currently generating about 0.44 per unit of volatility. If you would invest 7,988 in Stanley Black Decker on November 2, 2024 and sell it today you would earn a total of 1,004 from holding Stanley Black Decker or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Stanley Black Decker
Performance |
| Timeline |
| RBC Bearings |
| Stanley Black Decker |
RBC Bearings and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Stanley Black
The main advantage of trading using opposite RBC Bearings and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Stanley Black 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 Stanley Black will offset losses from the drop in Stanley Black's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Stanley Black vs. Toro Co | Stanley Black vs. Timken Company | Stanley Black vs. Lincoln Electric Holdings | Stanley Black vs. Kennametal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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