Correlation Between RBC Bearings and Red Branch

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

Diversification Opportunities for RBC Bearings and Red Branch

0.0

Correlation Coefficient

RBC Bearings  Red Branch

Pay attention - limited upside

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

Pair Corralation between RBC Bearings and Red Branch

If you would invest  32,013  in RBC Bearings Incorporated on September 18, 2024 and sell it today you would earn a total of  36.00  from holding RBC Bearings Incorporated or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Red Branch Technologies

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.

Red Branch Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Branch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with RBC Bearings and Red Branch

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

The idea behind RBC Bearings Incorporated and Red Branch Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.