Correlation Between RBC Bearings and Edgewater Technology

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

Diversification Opportunities for RBC Bearings and Edgewater Technology

0.0

Correlation Coefficient

RBC Bearings  Edgewater Technology

Pay attention - limited upside

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

Pair Corralation between RBC Bearings and Edgewater Technology

If you would invest  0.00  in Edgewater Technology on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Edgewater Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Edgewater Technology

RBC Bearings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Bearings Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Edgewater Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewater Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Edgewater Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with RBC Bearings and Edgewater Technology

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

The idea behind RBC Bearings Incorporated and Edgewater Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.