Correlation Between RBC Bearings and SL Green

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

Diversification Opportunities for RBC Bearings and SL Green

0.41

Correlation Coefficient

RBC Bearings  SL Green

Very weak diversification

The 3 months correlation between RBC and SLG is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of RBC Bearings i.e., RBC Bearings and SL Green go up and down completely randomly.

Pair Corralation between RBC Bearings and SL Green

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.39 times more return on investment than SL Green. However, RBC Bearings Incorporated is 2.53 times less risky than SL Green. It trades about -0.63 of its potential returns per unit of risk. SL Green Realty is currently generating about -0.45 per unit of risk. If you would invest  32,637  in RBC Bearings Incorporated on October 15, 2024 and sell it today you would lose (3,201) from holding RBC Bearings Incorporated or give up 9.81% of portfolio value over 90 days.

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

RBC Bearings Incorporated  vs.  SL Green Realty

RBC Bearings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 3 (%) 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.

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RBC Bearings and SL Green

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

The idea behind RBC Bearings Incorporated and SL Green Realty 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.