Correlation Between RBC Bearings and Enlight Renewable

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

Diversification Opportunities for RBC Bearings and Enlight Renewable

0.31

Correlation Coefficient

RBC Bearings  Enlight Renewable

Weak diversification

The 3 months correlation between RBC and Enlight is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of RBC Bearings i.e., RBC Bearings and Enlight Renewable go up and down completely randomly.

Pair Corralation between RBC Bearings and Enlight Renewable

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.66 times more return on investment than Enlight Renewable. However, RBC Bearings Incorporated is 1.52 times less risky than Enlight Renewable. It trades about 0.01 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.01 per unit of risk. 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

RBC Bearings Incorporated  vs.  Enlight Renewable Energy

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.

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.

Pair Trading with RBC Bearings and Enlight Renewable

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

The idea behind RBC Bearings Incorporated and Enlight Renewable Energy 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.