Correlation Between RBC Bearings and NORTHWELL

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

Diversification Opportunities for RBC Bearings and NORTHWELL

-0.34

Correlation Coefficient

RBC Bearings  NORTHWELL

Very good diversification

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

Pair Corralation between RBC Bearings and NORTHWELL

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.94 times more return on investment than NORTHWELL. However, RBC Bearings Incorporated is 1.06 times less risky than NORTHWELL. It trades about 0.13 of its potential returns per unit of risk. NORTHWELL HEALTHCARE INC is currently generating about -0.05 per unit of risk. If you would invest  28,682  in RBC Bearings Incorporated on September 15, 2024 and sell it today you would earn a total of  4,076  from holding RBC Bearings Incorporated or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

RBC Bearings Incorporated  vs.  NORTHWELL HEALTHCARE INC

RBC Bearings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings exhibited solid returns over the last few months and may actually be approaching a breakup point.

NORTHWELL HEALTHCARE INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RBC Bearings and NORTHWELL

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

The idea behind RBC Bearings Incorporated and NORTHWELL HEALTHCARE 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.