Correlation Between Boeing and RBC Bearings

Can any of the company-specific risk be diversified away by investing in both Boeing and RBC Bearings 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 Boeing and RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and RBC Bearings, you can compare the effects of market volatilities on Boeing and RBC Bearings 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 Boeing with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and RBC Bearings.

Diversification Opportunities for Boeing and RBC Bearings

-0.06

Correlation Coefficient

Boeing  RBC Bearings

Good diversification

The 3 months correlation between Boeing and RBC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and RBC Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Boeing 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 The Boeing are associated (or correlated) with RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Boeing i.e., Boeing and RBC Bearings go up and down completely randomly.

Pair Corralation between Boeing and RBC Bearings

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.47 times more return on investment than RBC Bearings. However, Boeing is 1.47 times more volatile than RBC Bearings. It trades about -0.02 of its potential returns per unit of risk. RBC Bearings is currently generating about -0.12 per unit of risk. If you would invest  16,102  in The Boeing on September 3, 2024 and sell it today you would lose (558.00) from holding The Boeing or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

The Boeing  vs.  RBC Bearings

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

RBC Bearings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Bearings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Boeing and RBC Bearings

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

The idea behind The Boeing and RBC Bearings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.