Correlation Between Regal Beloit and Graco
Can any of the company-specific risk be diversified away by investing in both Regal Beloit and Graco 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 Regal Beloit and Graco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Beloit and Graco Inc, you can compare the effects of market volatilities on Regal Beloit and Graco 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 Regal Beloit with a short position of Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Beloit and Graco.
Diversification Opportunities for Regal Beloit and Graco
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regal and Graco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Regal Beloit and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Regal Beloit 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 Regal Beloit are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Regal Beloit i.e., Regal Beloit and Graco go up and down completely randomly.
Pair Corralation between Regal Beloit and Graco
Considering the 90-day investment horizon Regal Beloit is expected to generate 2.13 times more return on investment than Graco. However, Regal Beloit is 2.13 times more volatile than Graco Inc. It trades about 0.07 of its potential returns per unit of risk. Graco Inc is currently generating about 0.07 per unit of risk. If you would invest 11,728 in Regal Beloit on August 25, 2024 and sell it today you would earn a total of 6,009 from holding Regal Beloit or generate 51.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Beloit vs. Graco Inc
Performance |
| Timeline |
| Regal Beloit |
| Graco Inc |
Regal Beloit and Graco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Beloit and Graco
The main advantage of trading using opposite Regal Beloit and Graco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Beloit position performs unexpectedly, Graco 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 Graco will offset losses from the drop in Graco's long position.| Regal Beloit vs. Graco Inc | Regal Beloit vs. Franklin Electric Co | Regal Beloit vs. Flowserve | Regal Beloit vs. Donaldson |
| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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