Correlation Between Fluent and RBC Bearings

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

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

Diversification Opportunities for Fluent and RBC Bearings

-0.47

Correlation Coefficient

Fluent  RBC Bearings

Very good diversification

The 3 months correlation between Fluent and RBC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Fluent 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 Fluent Inc 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 Fluent i.e., Fluent and RBC Bearings go up and down completely randomly.

Pair Corralation between Fluent and RBC Bearings

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the RBC Bearings. In addition to that, Fluent is 2.71 times more volatile than RBC Bearings Incorporated. It trades about -0.02 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.07 per unit of volatility. If you would invest  27,107  in RBC Bearings Incorporated on September 25, 2024 and sell it today you would earn a total of  3,521  from holding RBC Bearings Incorporated or generate 12.99% return on investment over 90 days.

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

Fluent Inc  vs.  RBC Bearings Incorporated

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

RBC Bearings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 2 (%) 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 Fluent and RBC Bearings

The main advantage of trading using opposite Fluent and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent 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 Fluent Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.