Correlation Between RBC Bearings and Wendys
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on RBC Bearings and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Wendys.
Diversification Opportunities for RBC Bearings and Wendys
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RBC and Wendys is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of RBC Bearings i.e., RBC Bearings and Wendys go up and down completely randomly.
Pair Corralation between RBC Bearings and Wendys
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.1 times more return on investment than Wendys. However, RBC Bearings is 1.1 times more volatile than The Wendys Co. It trades about 0.34 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.18 per unit of risk. If you would invest 28,637 in RBC Bearings Incorporated on August 31, 2024 and sell it today you would earn a total of 5,329 from holding RBC Bearings Incorporated or generate 18.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. The Wendys Co
Performance |
| Timeline |
| RBC Bearings |
| The Wendys |
RBC Bearings and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Wendys
The main advantage of trading using opposite RBC Bearings and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Wendys vs. RLJ Lodging Trust | Wendys vs. Aquagold International | Wendys vs. Stepstone Group | Wendys vs. Morningstar Unconstrained Allocation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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