Correlation Between RBC Bearings and Kite Realty

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

Diversification Opportunities for RBC Bearings and Kite Realty

-0.58

Correlation Coefficient

RBC Bearings  Kite Realty

Excellent diversification

The 3 months correlation between RBC and Kite is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of RBC Bearings i.e., RBC Bearings and Kite Realty go up and down completely randomly.

Pair Corralation between RBC Bearings and Kite Realty

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.12 times more return on investment than Kite Realty. However, RBC Bearings is 1.12 times more volatile than Kite Realty Group. It trades about 0.09 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.1 per unit of risk. If you would invest  30,393  in RBC Bearings Incorporated on December 26, 2024 and sell it today you would earn a total of  2,948  from holding RBC Bearings Incorporated or generate 9.7% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Kite Realty Group

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.

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with RBC Bearings and Kite Realty

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

The idea behind RBC Bearings Incorporated and Kite Realty Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.