Correlation Between RBC Bearings and BCB Bancorp

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

Diversification Opportunities for RBC Bearings and BCB Bancorp

0.74

Correlation Coefficient

RBC Bearings  BCB Bancorp

Poor diversification

The 3 months correlation between RBC and BCB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of RBC Bearings i.e., RBC Bearings and BCB Bancorp go up and down completely randomly.

Pair Corralation between RBC Bearings and BCB Bancorp

Considering the 90-day investment horizon RBC Bearings is expected to generate 1.66 times less return on investment than BCB Bancorp. But when comparing it to its historical volatility, RBC Bearings Incorporated is 1.53 times less risky than BCB Bancorp. It trades about 0.07 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  985.00  in BCB Bancorp on September 24, 2024 and sell it today you would earn a total of  222.00  from holding BCB Bancorp or generate 22.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

RBC Bearings Incorporated  vs.  BCB Bancorp

RBC Bearings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, RBC Bearings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BCB Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with RBC Bearings and BCB Bancorp

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

The idea behind RBC Bearings Incorporated and BCB Bancorp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.