Correlation Between MISUMI GROUP and RBC Bearings

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

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

Diversification Opportunities for MISUMI GROUP and RBC Bearings

-0.07

Correlation Coefficient

MISUMI GROUP  RBC Bearings

Good diversification

The 3 months correlation between MISUMI and RBC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MISUMI GROUP INC and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings and MISUMI GROUP 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 MISUMI GROUP INC 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 MISUMI GROUP i.e., MISUMI GROUP and RBC Bearings go up and down completely randomly.

Pair Corralation between MISUMI GROUP and RBC Bearings

Assuming the 90 days horizon MISUMI GROUP INC is expected to generate 3.13 times more return on investment than RBC Bearings. However, MISUMI GROUP is 3.13 times more volatile than RBC Bearings Incorporated. It trades about 0.03 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.04 per unit of risk. If you would invest  1,024  in MISUMI GROUP INC on October 23, 2024 and sell it today you would earn a total of  356.00  from holding MISUMI GROUP INC or generate 34.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

MISUMI GROUP INC  vs.  RBC Bearings Incorporated

MISUMI GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

RBC Bearings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RBC Bearings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MISUMI GROUP and RBC Bearings

The main advantage of trading using opposite MISUMI GROUP and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MISUMI GROUP 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 MISUMI GROUP INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.