Correlation Between Second Sight and RBC Bearings

Can any of the company-specific risk be diversified away by investing in both Second Sight and RBC Bearings 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 Second Sight and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Second Sight Medical and RBC Bearings Incorporated, you can compare the effects of market volatilities on Second Sight and RBC Bearings 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 Second Sight with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Second Sight and RBC Bearings.

Diversification Opportunities for Second Sight and RBC Bearings

0.82

Correlation Coefficient

Second Sight  RBC Bearings

Very poor diversification

The 3 months correlation between Second and RBC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Second Sight Medical and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings rporated and Second Sight 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 Second Sight Medical are associated (or correlated) with RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings rporated has no effect on the direction of Second Sight i.e., Second Sight and RBC Bearings go up and down completely randomly.

Pair Corralation between Second Sight and RBC Bearings

Given the investment horizon of 90 days Second Sight Medical is expected to under-perform the RBC Bearings. In addition to that, Second Sight is 2.91 times more volatile than RBC Bearings Incorporated. It trades about 0.0 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.06 per unit of volatility. If you would invest  15,549  in RBC Bearings Incorporated on January 31, 2024 and sell it today you would earn a total of  9,130  from holding RBC Bearings Incorporated or generate 58.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	15.79%
Values	Daily Returns

Second Sight Medical  vs.  RBC Bearings Incorporated

Second Sight Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Second Sight Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Second Sight is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

RBC Bearings rporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Bearings Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Second Sight and RBC Bearings

The main advantage of trading using opposite Second Sight and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Second Sight position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.

The idea behind Second Sight Medical and RBC Bearings Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.