Correlation Between Pinterest and RBC Bearings

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

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

Diversification Opportunities for Pinterest and RBC Bearings

-0.42

Correlation Coefficient

Pinterest  RBC Bearings

Very good diversification

The 3 months correlation between Pinterest and RBC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and RBC Bearings go up and down completely randomly.

Pair Corralation between Pinterest and RBC Bearings

Given the investment horizon of 90 days Pinterest is expected to generate 1.74 times less return on investment than RBC Bearings. In addition to that, Pinterest is 1.5 times more volatile than RBC Bearings Incorporated. It trades about 0.04 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.09 per unit of volatility. If you would invest  29,216  in RBC Bearings Incorporated on September 18, 2024 and sell it today you would earn a total of  2,856  from holding RBC Bearings Incorporated or generate 9.78% return on investment over 90 days.

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

Pinterest  vs.  RBC Bearings Incorporated

Pinterest

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

RBC Bearings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pinterest and RBC Bearings

The main advantage of trading using opposite Pinterest and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.