Correlation Between RBC Bearings and Voyager Acquisition

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

Diversification Opportunities for RBC Bearings and Voyager Acquisition

0.19

Correlation Coefficient

RBC Bearings  Voyager Acquisition

Average diversification

The 3 months correlation between RBC and Voyager is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Voyager Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voyager Acquisition Corp 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 Voyager Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voyager Acquisition Corp has no effect on the direction of RBC Bearings i.e., RBC Bearings and Voyager Acquisition go up and down completely randomly.

Pair Corralation between RBC Bearings and Voyager Acquisition

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 10.88 times more return on investment than Voyager Acquisition. However, RBC Bearings is 10.88 times more volatile than Voyager Acquisition Corp. It trades about 0.16 of its potential returns per unit of risk. Voyager Acquisition Corp is currently generating about 0.07 per unit of risk. If you would invest  28,570  in RBC Bearings Incorporated on September 4, 2024 and sell it today you would earn a total of  4,953  from holding RBC Bearings Incorporated or generate 17.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Voyager Acquisition Corp

RBC Bearings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Voyager Acquisition Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voyager Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Voyager Acquisition is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with RBC Bearings and Voyager Acquisition

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

The idea behind RBC Bearings Incorporated and Voyager Acquisition Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.