Correlation Between RBC Bearings and Loyalty Ventures

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

Diversification Opportunities for RBC Bearings and Loyalty Ventures

0.0

Correlation Coefficient

RBC Bearings  Loyalty Ventures

Pay attention - limited upside

The 3 months correlation between RBC and Loyalty is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of RBC Bearings i.e., RBC Bearings and Loyalty Ventures go up and down completely randomly.

Pair Corralation between RBC Bearings and Loyalty Ventures

If you would invest  30,628  in RBC Bearings Incorporated on December 20, 2024 and sell it today you would earn a total of  3,206  from holding RBC Bearings Incorporated or generate 10.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Loyalty Ventures

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.

Loyalty Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RBC Bearings and Loyalty Ventures

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

The idea behind RBC Bearings Incorporated and Loyalty Ventures 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.