Correlation Between RBC Bearings and Lionsgate Studios

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

Diversification Opportunities for RBC Bearings and Lionsgate Studios

0.36

Correlation Coefficient

RBC Bearings  Lionsgate Studios

Weak diversification

The 3 months correlation between RBC and Lionsgate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp 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 Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of RBC Bearings i.e., RBC Bearings and Lionsgate Studios go up and down completely randomly.

Pair Corralation between RBC Bearings and Lionsgate Studios

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.59 times more return on investment than Lionsgate Studios. However, RBC Bearings Incorporated is 1.71 times less risky than Lionsgate Studios. It trades about 0.18 of its potential returns per unit of risk. Lionsgate Studios Corp is currently generating about 0.06 per unit of risk. If you would invest  28,437  in RBC Bearings Incorporated on September 5, 2024 and sell it today you would earn a total of  5,666  from holding RBC Bearings Incorporated or generate 19.92% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Lionsgate Studios Corp

RBC Bearings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lionsgate Studios Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lionsgate Studios may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RBC Bearings and Lionsgate Studios

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

The idea behind RBC Bearings Incorporated and Lionsgate Studios Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.