Correlation Between RBC Bearings and Upbound
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Upbound 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 Upbound 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 Upbound Group, you can compare the effects of market volatilities on RBC Bearings and Upbound 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 Upbound. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Upbound.
Diversification Opportunities for RBC Bearings and Upbound
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBC and Upbound is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of RBC Bearings i.e., RBC Bearings and Upbound go up and down completely randomly.
Pair Corralation between RBC Bearings and Upbound
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.75 times more return on investment than Upbound. However, RBC Bearings Incorporated is 1.32 times less risky than Upbound. It trades about 0.09 of its potential returns per unit of risk. Upbound Group is currently generating about 0.02 per unit of risk. If you would invest 21,074 in RBC Bearings Incorporated on September 2, 2024 and sell it today you would earn a total of 12,437 from holding RBC Bearings Incorporated or generate 59.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Upbound Group
Performance |
| Timeline |
| RBC Bearings |
| Upbound Group |
RBC Bearings and Upbound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Upbound
The main advantage of trading using opposite RBC Bearings and Upbound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Upbound 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 Upbound will offset losses from the drop in Upbound's long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Upbound vs. ServiceNow | Upbound vs. AmTrust Financial Services | Upbound vs. Usio Inc | Upbound vs. Minerals Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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