Correlation Between Brenmiller Energy and RBC Bearings

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

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

Diversification Opportunities for Brenmiller Energy and RBC Bearings

-0.46

Correlation Coefficient

Brenmiller Energy  RBC Bearings

Very good diversification

The 3 months correlation between Brenmiller and RBC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brenmiller Energy Ltd and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and Brenmiller Energy 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 Brenmiller Energy Ltd 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 Brenmiller Energy i.e., Brenmiller Energy and RBC Bearings go up and down completely randomly.

Pair Corralation between Brenmiller Energy and RBC Bearings

Given the investment horizon of 90 days Brenmiller Energy Ltd is expected to under-perform the RBC Bearings. In addition to that, Brenmiller Energy is 3.31 times more volatile than RBC Bearings Incorporated. It trades about -0.05 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about -0.11 per unit of volatility. If you would invest  32,251  in RBC Bearings Incorporated on September 20, 2024 and sell it today you would lose (1,039) from holding RBC Bearings Incorporated or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brenmiller Energy Ltd  vs.  RBC Bearings Incorporated

Brenmiller Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brenmiller Energy Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

RBC Bearings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brenmiller Energy and RBC Bearings

The main advantage of trading using opposite Brenmiller Energy and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brenmiller Energy 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 Brenmiller Energy Ltd and RBC Bearings Incorporated 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 Global Correlations module to find global opportunities by holding instruments from different markets.