Correlation Between RBC Bearings and Canada Goose

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

Diversification Opportunities for RBC Bearings and Canada Goose

-0.57

Correlation Coefficient

RBC Bearings  Canada Goose

Excellent diversification

The 3 months correlation between RBC and Canada is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings 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 Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of RBC Bearings i.e., RBC Bearings and Canada Goose go up and down completely randomly.

Pair Corralation between RBC Bearings and Canada Goose

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.62 times more return on investment than Canada Goose. However, RBC Bearings Incorporated is 1.6 times less risky than Canada Goose. It trades about 0.15 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.01 per unit of risk. If you would invest  28,652  in RBC Bearings Incorporated on September 12, 2024 and sell it today you would earn a total of  4,602  from holding RBC Bearings Incorporated or generate 16.06% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Canada Goose Holdings

RBC Bearings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RBC Bearings and Canada Goose

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

The idea behind RBC Bearings Incorporated and Canada Goose Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.