Correlation Between RBC Bearings and ICC Holdings

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

Diversification Opportunities for RBC Bearings and ICC Holdings

-0.41

Correlation Coefficient

RBC Bearings  ICC Holdings

Very good diversification

The 3 months correlation between RBC and ICC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of RBC Bearings i.e., RBC Bearings and ICC Holdings go up and down completely randomly.

Pair Corralation between RBC Bearings and ICC Holdings

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to under-perform the ICC Holdings. In addition to that, RBC Bearings is 2.86 times more volatile than ICC Holdings. It trades about -0.32 of its total potential returns per unit of risk. ICC Holdings is currently generating about -0.04 per unit of volatility. If you would invest  1,600  in ICC Holdings on January 26, 2024 and sell it today you would lose (5.00) from holding ICC Holdings or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.19%
Values	Daily Returns

RBC Bearings Incorporated  vs.  ICC Holdings

RBC Bearings rporated

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 latest unfluctuating performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ICC Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with RBC Bearings and ICC Holdings

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

The idea behind RBC Bearings Incorporated and ICC Holdings 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.