Correlation Between RBC Bearings and Evolution Mining

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

Diversification Opportunities for RBC Bearings and Evolution Mining

-0.05

Correlation Coefficient

RBC Bearings  Evolution Mining

Good diversification

The 3 months correlation between RBC and Evolution is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of RBC Bearings i.e., RBC Bearings and Evolution Mining go up and down completely randomly.

Pair Corralation between RBC Bearings and Evolution Mining

Considering the 90-day investment horizon RBC Bearings is expected to generate 1.01 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, RBC Bearings Incorporated is 1.76 times less risky than Evolution Mining. It trades about 0.01 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

RBC Bearings Incorporated  vs.  Evolution Mining

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.

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.

Pair Trading with RBC Bearings and Evolution Mining

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

The idea behind RBC Bearings Incorporated and Evolution Mining 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.