Correlation Between InfuSystems Holdings and RBC Bearings

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

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

Diversification Opportunities for InfuSystems Holdings and RBC Bearings

-0.19

Correlation Coefficient

InfuSystems Holdings  RBC Bearings

Good diversification

The 3 months correlation between InfuSystems and RBC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding InfuSystems Holdings and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and InfuSystems Holdings 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 InfuSystems Holdings 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 InfuSystems Holdings i.e., InfuSystems Holdings and RBC Bearings go up and down completely randomly.

Pair Corralation between InfuSystems Holdings and RBC Bearings

Given the investment horizon of 90 days InfuSystems Holdings is expected to under-perform the RBC Bearings. In addition to that, InfuSystems Holdings is 1.78 times more volatile than RBC Bearings Incorporated. It trades about -0.17 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.1 per unit of volatility. If you would invest  30,628  in RBC Bearings Incorporated on December 20, 2024 and sell it today you would earn a total of  3,206  from holding RBC Bearings Incorporated or generate 10.47% return on investment over 90 days.

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

InfuSystems Holdings  vs.  RBC Bearings Incorporated

InfuSystems Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

RBC Bearings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 7 (%) 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 April 2025.

Pair Trading with InfuSystems Holdings and RBC Bearings

The main advantage of trading using opposite InfuSystems Holdings and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfuSystems Holdings 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 InfuSystems Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .