Correlation Between RBC Bearings and Lipocine

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

Diversification Opportunities for RBC Bearings and Lipocine

-0.34

Correlation Coefficient

RBC Bearings  Lipocine

Very good diversification

The 3 months correlation between RBC and Lipocine is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of RBC Bearings i.e., RBC Bearings and Lipocine go up and down completely randomly.

Pair Corralation between RBC Bearings and Lipocine

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.33 times more return on investment than Lipocine. However, RBC Bearings Incorporated is 3.04 times less risky than Lipocine. It trades about 0.07 of its potential returns per unit of risk. Lipocine is currently generating about -0.05 per unit of risk. If you would invest  27,107  in RBC Bearings Incorporated on September 25, 2024 and sell it today you would earn a total of  3,521  from holding RBC Bearings Incorporated or generate 12.99% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Lipocine

RBC Bearings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 2 (%) 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.

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RBC Bearings and Lipocine

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

The idea behind RBC Bearings Incorporated and Lipocine 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.