Correlation Between Evolution Mining and RBC Bearings

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

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

Diversification Opportunities for Evolution Mining and RBC Bearings

-0.05

Correlation Coefficient

Evolution Mining  RBC Bearings

Good diversification

The 3 months correlation between Evolution and RBC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Evolution Mining 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 Evolution Mining 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 has no effect on the direction of Evolution Mining i.e., Evolution Mining and RBC Bearings go up and down completely randomly.

Pair Corralation between Evolution Mining and RBC Bearings

Assuming the 90 days horizon Evolution Mining is expected to generate 1.76 times more return on investment than RBC Bearings. However, Evolution Mining is 1.76 times more volatile than RBC Bearings Incorporated. It trades about 0.01 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.01 per unit of risk. If you would invest  305.00  in Evolution Mining on September 29, 2024 and sell it today you would lose (5.00) from holding Evolution Mining or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evolution Mining  vs.  RBC Bearings Incorporated

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RBC Bearings

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 rather sound fundamental drivers, RBC Bearings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Evolution Mining and RBC Bearings

The main advantage of trading using opposite Evolution Mining and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining 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 Evolution Mining 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.