Correlation Between RBC Bearings and Amgen

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

Diversification Opportunities for RBC Bearings and Amgen

-0.83

Correlation Coefficient

RBC Bearings  Amgen

Pay attention - limited upside

The 3 months correlation between RBC and Amgen is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of RBC Bearings i.e., RBC Bearings and Amgen go up and down completely randomly.

Pair Corralation between RBC Bearings and Amgen

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.81 times more return on investment than Amgen. However, RBC Bearings Incorporated is 1.23 times less risky than Amgen. It trades about 0.18 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.11 per unit of risk. If you would invest  31,348  in RBC Bearings Incorporated on September 16, 2024 and sell it today you would earn a total of  1,410  from holding RBC Bearings Incorporated or generate 4.5% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Amgen Inc

RBC Bearings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with RBC Bearings and Amgen

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

The idea behind RBC Bearings Incorporated and Amgen Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.