Correlation Between RBC Bearings and Beyond

Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Beyond 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 Beyond 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 Beyond Inc, you can compare the effects of market volatilities on RBC Bearings and Beyond 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 Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Beyond.

Diversification Opportunities for RBC Bearings and Beyond

0.26

Correlation Coefficient

RBC Bearings  Beyond

Modest diversification

The 3 months correlation between RBC and Beyond is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Beyond Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Inc 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 Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Inc has no effect on the direction of RBC Bearings i.e., RBC Bearings and Beyond go up and down completely randomly.

Pair Corralation between RBC Bearings and Beyond

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.34 times more return on investment than Beyond. However, RBC Bearings Incorporated is 2.94 times less risky than Beyond. It trades about -0.43 of its potential returns per unit of risk. Beyond Inc is currently generating about -0.73 per unit of risk. If you would invest  26,946  in RBC Bearings Incorporated on January 29, 2024 and sell it today you would lose (2,443) from holding RBC Bearings Incorporated or give up 9.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Beyond Inc

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.

Beyond Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Beyond is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Bearings and Beyond

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

The idea behind RBC Bearings Incorporated and Beyond Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.