Correlation Between RBC Bearings and National Healthcare

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

Diversification Opportunities for RBC Bearings and National Healthcare

-0.29

Correlation Coefficient

RBC Bearings  National Healthcare

Very good diversification

The 3 months correlation between RBC and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and National Healthcare Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Healthcare 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 National Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Healthcare has no effect on the direction of RBC Bearings i.e., RBC Bearings and National Healthcare go up and down completely randomly.

Pair Corralation between RBC Bearings and National Healthcare

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.32 times more return on investment than National Healthcare. However, RBC Bearings is 1.32 times more volatile than National Healthcare Properties,. It trades about 0.05 of its potential returns per unit of risk. National Healthcare Properties, is currently generating about 0.03 per unit of risk. If you would invest  32,049  in RBC Bearings Incorporated on December 17, 2024 and sell it today you would earn a total of  1,599  from holding RBC Bearings Incorporated or generate 4.99% 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.  National Healthcare Properties

RBC Bearings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 4 (%) 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.

National Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Healthcare Properties, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, National Healthcare is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with RBC Bearings and National Healthcare

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

The idea behind RBC Bearings Incorporated and National Healthcare Properties, 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..