Correlation Between RBC Bearings and FactSet Research

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

Diversification Opportunities for RBC Bearings and FactSet Research

0.86

Correlation Coefficient

RBC Bearings  FactSet Research

Very poor diversification

The 3 months correlation between RBC and FactSet is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of RBC Bearings i.e., RBC Bearings and FactSet Research go up and down completely randomly.

Pair Corralation between RBC Bearings and FactSet Research

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.32 times more return on investment than FactSet Research. However, RBC Bearings is 1.32 times more volatile than FactSet Research Systems. It trades about 0.05 of its potential returns per unit of risk. FactSet Research Systems is currently generating about 0.04 per unit of risk. If you would invest  21,311  in RBC Bearings Incorporated on September 19, 2024 and sell it today you would earn a total of  9,901  from holding RBC Bearings Incorporated or generate 46.46% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  FactSet Research Systems

RBC Bearings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 5 (%) 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 January 2025.

FactSet Research Systems

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RBC Bearings and FactSet Research

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

The idea behind RBC Bearings Incorporated and FactSet Research Systems 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 Stocks Directory module to find actively traded stocks across global markets.