Correlation Between RBC Bearings and Thor Industries
Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Thor Industries 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 Thor Industries 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 Thor Industries, you can compare the effects of market volatilities on RBC Bearings and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Thor Industries.
Diversification Opportunities for RBC Bearings and Thor Industries
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RBC and Thor is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of RBC Bearings i.e., RBC Bearings and Thor Industries go up and down completely randomly.
Pair Corralation between RBC Bearings and Thor Industries
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.74 times more return on investment than Thor Industries. However, RBC Bearings Incorporated is 1.35 times less risky than Thor Industries. It trades about 0.06 of its potential returns per unit of risk. Thor Industries is currently generating about 0.04 per unit of risk. If you would invest 20,759 in RBC Bearings Incorporated on September 14, 2024 and sell it today you would earn a total of 11,965 from holding RBC Bearings Incorporated or generate 57.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
RBC Bearings Incorporated vs. Thor Industries
Performance |
Timeline |
RBC Bearings |
Thor Industries |
RBC Bearings and Thor Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RBC Bearings and Thor Industries
The main advantage of trading using opposite RBC Bearings and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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