Correlation Between RBC Bearings and PACIFIC

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

Diversification Opportunities for RBC Bearings and PACIFIC

0.06

Correlation Coefficient

RBC Bearings  PACIFIC

Significant diversification

The 3 months correlation between RBC and PACIFIC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of RBC Bearings i.e., RBC Bearings and PACIFIC go up and down completely randomly.

Pair Corralation between RBC Bearings and PACIFIC

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 3.76 times more return on investment than PACIFIC. However, RBC Bearings is 3.76 times more volatile than PACIFIC GAS AND. It trades about 0.08 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.03 per unit of risk. If you would invest  30,462  in RBC Bearings Incorporated on December 23, 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	98.39%
Values	Daily Returns

RBC Bearings Incorporated  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RBC Bearings and PACIFIC

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

The idea behind RBC Bearings Incorporated and PACIFIC GAS AND 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.