Correlation Between RBC Bearings and 00108WAH3

Can any of the company-specific risk be diversified away by investing in both RBC Bearings and 00108WAH3 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 00108WAH3 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 AEP TEX INC, you can compare the effects of market volatilities on RBC Bearings and 00108WAH3 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 00108WAH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and 00108WAH3.

Diversification Opportunities for RBC Bearings and 00108WAH3

0.12

Correlation Coefficient

RBC Bearings  00108WAH3

Average diversification

The 3 months correlation between RBC and 00108WAH3 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of RBC Bearings i.e., RBC Bearings and 00108WAH3 go up and down completely randomly.

Pair Corralation between RBC Bearings and 00108WAH3

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 2.57 times more return on investment than 00108WAH3. However, RBC Bearings is 2.57 times more volatile than AEP TEX INC. It trades about 0.08 of its potential returns per unit of risk. AEP TEX INC is currently generating about -0.13 per unit of risk. If you would invest  30,462  in RBC Bearings Incorporated on December 22, 2024 and sell it today you would earn a total of  2,540  from holding RBC Bearings Incorporated or generate 8.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  AEP TEX INC

RBC Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 6 (%) 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.

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAH3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RBC Bearings and 00108WAH3

The main advantage of trading using opposite RBC Bearings and 00108WAH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, 00108WAH3 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 00108WAH3 will offset losses from the drop in 00108WAH3's long position.

The idea behind RBC Bearings Incorporated and AEP TEX INC 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .