Correlation Between RBC Bearings and BrightSphere Investment

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

Diversification Opportunities for RBC Bearings and BrightSphere Investment

0.0

Correlation Coefficient

RBC Bearings  BrightSphere Investment

Pay attention - limited upside

The 3 months correlation between RBC and BrightSphere is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and BrightSphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSphere Investment 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 BrightSphere Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSphere Investment has no effect on the direction of RBC Bearings i.e., RBC Bearings and BrightSphere Investment go up and down completely randomly.

Pair Corralation between RBC Bearings and BrightSphere Investment

If you would invest  29,987  in RBC Bearings Incorporated on September 27, 2024 and sell it today you would earn a total of  396.00  from holding RBC Bearings Incorporated or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  BrightSphere Investment Group

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.

BrightSphere Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BrightSphere Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BrightSphere Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RBC Bearings and BrightSphere Investment

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

The idea behind RBC Bearings Incorporated and BrightSphere Investment Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.