Correlation Between RBC Bearings and Bright Scholar

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

Diversification Opportunities for RBC Bearings and Bright Scholar

-0.26

Correlation Coefficient

RBC Bearings  Bright Scholar

Very good diversification

The 3 months correlation between RBC and Bright is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education 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 Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of RBC Bearings i.e., RBC Bearings and Bright Scholar go up and down completely randomly.

Pair Corralation between RBC Bearings and Bright Scholar

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.31 times more return on investment than Bright Scholar. However, RBC Bearings Incorporated is 3.21 times less risky than Bright Scholar. It trades about 0.1 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.02 per unit of risk. If you would invest  30,019  in RBC Bearings Incorporated on December 27, 2024 and sell it today you would earn a total of  3,230  from holding RBC Bearings Incorporated or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Bright Scholar Education

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.

Bright Scholar Education

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Bright Scholar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with RBC Bearings and Bright Scholar

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

The idea behind RBC Bearings Incorporated and Bright Scholar Education 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.