Correlation Between Enlight Renewable and RBC Bearings

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

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

Diversification Opportunities for Enlight Renewable and RBC Bearings

0.31

Correlation Coefficient

Enlight Renewable  RBC Bearings

Weak diversification

The 3 months correlation between Enlight and RBC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and RBC Bearings go up and down completely randomly.

Pair Corralation between Enlight Renewable and RBC Bearings

Given the investment horizon of 90 days Enlight Renewable is expected to generate 1.22 times less return on investment than RBC Bearings. In addition to that, Enlight Renewable is 1.52 times more volatile than RBC Bearings Incorporated. It trades about 0.01 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.01 per unit of volatility. If you would invest  30,279  in RBC Bearings Incorporated on September 24, 2024 and sell it today you would earn a total of  183.00  from holding RBC Bearings Incorporated or generate 0.6% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  RBC Bearings Incorporated

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RBC Bearings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Enlight Renewable and RBC Bearings

The main advantage of trading using opposite Enlight Renewable and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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 Enlight Renewable Energy 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.