Correlation Between RBC Bearings and Aboitiz Power

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

Diversification Opportunities for RBC Bearings and Aboitiz Power

0.19

Correlation Coefficient

RBC Bearings  Aboitiz Power

Average diversification

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

Pair Corralation between RBC Bearings and Aboitiz Power

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to under-perform the Aboitiz Power. In addition to that, RBC Bearings is 1.63 times more volatile than Aboitiz Power. It trades about 0.0 of its total potential returns per unit of risk. Aboitiz Power is currently generating about 0.07 per unit of volatility. If you would invest  52.00  in Aboitiz Power on June 22, 2024 and sell it today you would earn a total of  11.00  from holding Aboitiz Power or generate 21.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	41.01%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Aboitiz Power

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 October 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aboitiz Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aboitiz Power is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RBC Bearings and Aboitiz Power

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

The idea behind RBC Bearings Incorporated and Aboitiz Power 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.