Correlation Between RBC Bearings and Juniata Valley

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

Diversification Opportunities for RBC Bearings and Juniata Valley

0.82

Correlation Coefficient

RBC Bearings  Juniata Valley

Very poor diversification

The 3 months correlation between RBC and Juniata is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial 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 Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of RBC Bearings i.e., RBC Bearings and Juniata Valley go up and down completely randomly.

Pair Corralation between RBC Bearings and Juniata Valley

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.61 times more return on investment than Juniata Valley. However, RBC Bearings Incorporated is 1.63 times less risky than Juniata Valley. It trades about 0.07 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.04 per unit of risk. If you would invest  26,877  in RBC Bearings Incorporated on September 24, 2024 and sell it today you would earn a total of  3,751  from holding RBC Bearings Incorporated or generate 13.96% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Juniata Valley Financial

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.

Juniata Valley Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Bearings and Juniata Valley

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

The idea behind RBC Bearings Incorporated and Juniata Valley Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.